How do I shop for a mortgage?

An agent can help you compare interest rates and terms to find out which mortgage plan is best for you and can refer you to lenders in the area.

However, each buyer's circumstances are unique, and once you've narrowed the filed, you will want to discuss your case in detail with the lender. You'll determine, for instance:

• What kinds of loan the lender offers (both fixed rate and adjustable rate).
• What terms are offered on adjustable-rate loan: rate adjustment frequency, maximum limit on each rate change, frequency, maximum limit on each rate change, frequency of monthly payment adjustment, ceiling on payment adjustments, possibly extension of the length of time on the loan pay-off, life-of-the-loan interest rate cap, conversion privilege, positive of negative amortization, etc.
• What amount investment is required for a down payment.
• What is the term (length of time) to repay a loan, and whether there is a prepayment penalty if you n your loan before its due date. In some areas pay-off penalties are illegal, while in other areas common. Ask an agent for the local practice.
• What fees are involved (credit report, appraisal, survey, legal costs, "points," title insurance, etc.)
• Whether the lender can furnish you a second mortgage, if needed, at a pre-determined interest rate.
• How long it will take to process your application.
• What inspections the lender will require.
• What kinds of insurance and how much coverage you will be required to carry.

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