How to Ensure You Get the Best Home Loan

By Sheryl Landrum Columnist

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The recent high foreclosure rate in the mortgage industry has been a wake-up call for borrowers looking for new home loans. Borrowers are becoming more aware of the mortgage process and are looking for safer and more conventional loans to avoid getting a home loan that can lead to trouble. How do you shop smartly and get the best mortgage loan for your new home or refinance?

Always use a lender with a great track record when considering a new home loan. Ask your friends and colleagues who they recommend. Check with your state's Department of Real Estate for any problems or complaints from borrowers. Talk to more than one loan officer as well when you are getting a mortgage to ensure you are getting a good home loan.

Before committing to your new mortgage, make sure you have a thorough understanding of your Good Faith Estimate and your Truth-in-Lending Disclosure. These two documents will give you the costs of your new home loan as well as the interest rate, terms, and will disclose any prepayment penalties as well. By law, a loan officer must provide these documents within three days of taking your application.

Finally, know your mortgage product. Risky home loans with variable interest rates have gotten many homeowners in trouble. Make sure your mortgage loan is one you can afford if your plans change. Consider impounds as well; while your monthly house payment will be higher, it will keep you from getting hit with hefty annual payments you may not be able to afford.

About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding, Inc. in Carlsbad, California and a freelance writer on mtgage issues.

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