The Loan

You should interview lenders to help you evaluate the kind of loan, and loan officer that best suits your needs.

How to Find a Lender:  Today, lenders can be found through a variety of sources.  In addition to calling on ads in the newspaper, you can also find and apply to lenders over the Internet and through referrals from your REALTOR^®.  We would be happy to suggest lenders we have used to close successfully transactions for other customers and clients and have proven themselves competitive and capable even with problem properties or poor credit.

Choosing the Right Lender:  Interview several lenders to evaluate the following:

• Listen to their presentation and determine their ability to explain things clearly.
• Find a reason to call and leave a message so you can test how effectively they return your phone calls in a reasonable time period.
• Compare their competitiveness regarding interest rates, points, costs and fees.
• Evaluate the availability of loan programs that suit can suit your credit profile, financial needs, and desired property type.
• Ask about their access to the loan approval committee or underwriter and their familiarity to the kind of property you are buying.
• Ask how well they work with any specific title companies.
• Ask if they have any special documentation requirements.

Choosing the Right Kind of Loan:  There are so many types of loans on the market today that it is beyond the capability in this overview to list them all and then to do justice in explaining them.  Your lender is the best person to help you select a loan program to suit your needs.  Below is a summary of the three most popular loan types we see in practice.

1.    Fixed loan: The fixed rate loan assures your monthly payments will stay the same over the life of the loan, which is typically between 15 and 30 years.  Fixed rate loans may be best if you intend to hold the property for a long period of time, say over 7 years.

2.    ARMs (adjustable rate mortgages): ARM’s may be suitable if you plan to sell or refinance your home within the next few years.  The starting interest rate is typically lower than a fixed rate loan, saving you money initially.  However, it is important to understand the index, the readjustment interval, the capitalization rate, and the downside risks of an ARM before making a final decision to use this type of loan.

3.    Intermediate ARMs:  Also called “Hybrid Loans”, these loans can offer fixed interest rates for the first 3, 5, 7 or 10 years after which the interest rate adjusts with the market every 6 months or year thereafter.