It’s no secrete that mortgages get denied. This can be rather depressing after being excited about the decision to buy a home, and then having your dreams get denied! Here are the top 3 reasons why mortgages are denied and how to overcome such hurdles.

1. Not Enough Income/DTI

Not having enough income is the number 1 reason for mortgages being denied. Simply put, people don’t have enough money. Perhaps a person wanted to buy a house but were denied for this very reason. Banks have an obligation to lend money to those who can reasonably afford the payments. In fact, there are laws that the banks must follow when lending money for most mortgages. This helps people from purchasing a home with a mortgage they will have difficultly paying back.

Mortgages are complex and the bank uses several calculations to determine the risk involved in lending money. The main calculation used to determine if a home buyer can afford a certain mortgage amount is called the debt-to-income ratio (DTI). This is the buyers (monthly reoccurring debt + monthly mortgage payment) / gross monthly income.

Example:

Monthly debt
Monthly Car payment – $300
Credit card payment – $25
Student loan payment – $75
Monthly mortgage payment – $1600
Total monthly debt: $2000

Gross monthly income: $5000

DTI:  2000/5000= .4 or 40%

In this example, a person’s monthly reoccurring debt payments are 40% of their gross monthly income. Most mortgages allow a maximum DTI of 43%. In some cases where a large down payment is made and the client has lots of assets, a DTI of 50% may be allowed. These DTI restrictions tend to work in peoples favor, especially those who are not money conscious. It helps prevent home buyers from going into foreclosure or being “house poor”.

How to overcome

You can help your chances of qualifying (even qualifying for more) by having a larger down payment, earning more income, paying off current debt, and even cancelling a few credit cards. A good loan officer will continue to work with you even if you are denied for a mortgage. They can handle the more complicated calculations and the benefits of them. Not all factors that make up the DTI are created equal. The most common being credit cards.

Recall the minimum monthly payment that is required by the credit card company. Many credit cards will have a $25 – $100 minimum payment when a balance is carried over from the previous month. The catch is even if someone does not carry a balance on their credit cards, (paying off credit cards in full every month), the minimum payment still counts towards the monthly reoccurring debt. Having a ton of credit cards, even if paid off, will limit your buying power tremendously.

Example:

A person has 4 credit cards. Even if there is no balance on these credit cards, they owe no money, the total monthly debt with have to add in the minimum monthly payment to the debt-to-income ratio.

Monthly debt
Monthly Car payment – $300
Minimum credit card payment 1 – $25
Minimum credit card payment 2 – $50
Student loan payment – $75
Minimum credit card payment 3 – $50
Minimum credit card payment 4 – $100
Monthly mortgage payment – $1600
Total monthly debt: $2200

Gross monthly income: $5000

DTI:  2200/5000= .44 or 44%

This person would be denied for a $1600 mortgage amount using the standard 43% debt-to-income rule. However, by closing a couple of credit cards it would lower the monthly debt and then the person could qualify for the desired loan amount. Depending on the interest rate, by closing a credit card that has a minimum monthly payment of $100 can not only be the difference between being qualified or denied for a loan, but can also increase a persons buying power by $25,000 or more!

A good loan officer will do their best to strategize to qualify a person for a desired amount. Cancelling unused credit cards is one of many tactics. If the loan officer has not suggested this, ask them if it is an option.

2. Poor Credit History

The second most popular reason for mortgage denial is a poor credit history. Many factors can take place for this denial reason such as a bankruptcy, multiple late payments of credit cards, collections that are reported to the credit bureaus, lack of credit history…etc. We live in a culture where a good credit score is viewed as a dire importance.

There are many misconceptions regarding credit scores. An unfortunate misconception is a person who is under impression they must pay interest on their credit cards in order to get a better credit score.  That is, carry a balance from month to month and pay the 20.99% interest rate. There are many other fallacies. But let’s look at how to overcome being denied for poor credit history.

How to overcome

If you are denied for poor credit history you are able to write the financial institution that denied you and ask for the credit scores that the decision was based on. Obtaining a free copy of the credit report to see if there are any mistakes will help. Sometimes something small, like a medical bill that was already paid but is reporting as a collection, can still show on a credit report and cause the reason for the denial.

To help solve these problems consider using a credit repair company. Credit repair companies can contact the credit bureaus on your behalf and solve certain situations without you having to go through the hassle. With their help they can also come up with a plan for you to increase your credit score, which ideally will get you a better interest rate when applying again for a mortgage.

3. Collateral

Being denied for collateral reasons simply means the house is not worth the price that it is being sold for. No bank will lend more money than what a house is worth. This why homes that are bought with a mortgage have an appraisal done on them. The appraiser does an analysis and determines the fair market value of the home. If you and the seller agree on a purchase price of $220,000, but the appraised value is $200,000, the bank will only give you a loan pertaining to the $200,000.

In such a scenario one of three things will occur:

1) The buyer comes up with $20,000 out of pocket to cover the difference in value
2) Further negotiations continue between the buyer, seller, and real estate agents to come to an agreement
3) The buyer finds a different home

How to overcome

This is where having a good real estate agent comes into play. Ideally they will have an accurate fair market value of a home. They will also be an excellent negotiator to get you the best price possible.

Realize banks have problems too!

Part of the problem why many mortgages are denied is because they are unfair in the first place. This is why the debt-to-income ratio receives is the #1 reason for mortgage denials. When a bank overcharges on their interest rates it increases customer’s DTI’s, not because customers deserve the higher interest rates, but because the loans are unfair to begin with. Some banks are more fair than others when it comes to lending money.

Obtaining a mortgage review is the best way to make sure you do not overpay for your next mortgage. Learn more.

It can take several years to save for a down payment. And there are benefits of having a higher down payment such as access to different loan programs, better interest rates, higher approval amount, and lower monthly payments. Often sacrifices must be made, but in the long run you can get that home. Here are 5 money-saving ways to consider when building funds for a down payment.

1. Direct deposit into a different savings account

Many of us lack the discipline to save when our money is easily accessible. Making the one time effort of setting up direct deposit to a separate savings account where a portion of your paycheck goes into allows for this discipline to happen easier. Don’t touch the these savings unless of an emergency. And no, a morning coffee is not an emergency.

2. Go travel! … just not out of town

Do affordable ‘staycations’ this year. Vacations with flights, hotels, and restaurants are mighty expensive. It also doesn’t help that people tend to go over budget on vacations. Because you know, after all, we deserve it right. Making this sacrifice is a big one for many. But just think how many friends and relatives can come visit you in your new home.

3. Lower (or get rid of) your expenses

Those monthly bills add up. TV, internet, home phone, cell phone, car insurance, subscriptions…etc. Look at your expenses and decide which ones you can do without. Look into lowering them if you must have them. Calling around for a new insurance rate can save hundreds a month. Cancelling or finding cheaper alternatives to cabel can save over a thousand per year. Cell phone plans continue to get more and more affordable as time goes on. If it has been a few years on a cell phone plan, call your provider to see if there are now cheaper alternatives. With the extra cash you can put that right into the savings account.

4. Get rid of that credit card debt

I could write a book on this alone. Don’t fall for the trap that you need to be paying interest on your credit cards in order to get a good credit score. This is a fallacy. The killer interest rates credit card companies charge will hinder your efforts of saving for a down payment. Pay those credit cards off in full every month. Ideally, begin with the card that has the highest interest rate and pay it off; so on and so forth.

5. Do you have a rich uncle?

Down payments can be gifted from relatives. Whether it be parents, grandparents, aunts, uncles, brothers, sisters…etc. Certain types of loans have different rules. Often a simple letter stating that the money is indeed a gift, with no IOU attached to it, will be required. Your bank can walk you through the rules and steps for gifts as a down payment. So next time you are at the family BBQ, remind your relatives about all the birthdays they missed.

Avoid a Costly Mortgage

Be sure not to waste your efforts of saving for your down payment by getting a bad mortgage. Ultimately, the largest savings come from getting a good mortgage with a good interest rate and fees. Many home buyers are overcharged for their mortgages without knowing it. Don’t be one of them. Make sure your loan is fair by getting it reviewed before you “sign your life away.”

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No one wants to buy a lemon of a home, making a several hundred thousand dollar mistake. The majority of home buyers purchase a home inspection. But have you considered a ‘loan inspection’?

Home Inspection

A home inspection functions as an independent third party service. A home inspector is unbiased, impartial, and checks the quality of your house before you buy. This is to ensure that major aspects of the home are in good condition and working order prior to purchase. Home inspections often include the roof, electrical, hot water heater, air conditioning and heating systems, major appliances, potential mold issues, exterior and interior damage… the list goes on and on. It is very wise to pay the few hundred dollars prior to signing on the dotted line; avoiding a several hundred thousand dollar mistake of buying a bad home.

‘Loan Inspection’

Just like the home inspector checks the quality of the house, a ‘loan inspector’ (or loan review) checks the quality of a mortgage. Potentially saving home buyers from the catastrophe of overpaying by tens if not hundreds of thousands of dollars. A loan review provides an easy to read report on where any ‘damage’ on the proposed mortgage may be. This can help lower your monthly payments by a few hundred dollars. A loan review will check the fairness of your interest rate, origination charges and fees, points, credits, and annual percentage rate.

You can negotiate with your lender

A home inspection report is essential when negotiating the price of the home with the seller, especially for surprise findings. If the roof needs replacing and will cost 20 thousand dollars, the price of the home should reflect this or it is negotiated that the owners fix it prior to selling. If the sellers won’t budge, then you have a decision to make, either accept the house as is, or look elsewhere for a different home. A loan review operates in a similar manner. You can negotiate with the bank if there is any ‘damage’ found on your proposed mortgage. If the bank refuses to budge, you can either accept the mortgage as is, or find a more reasonable lender with what you now know to be fair.

Do it yourself

If you are the handyman type then doing your own inspection on your home may be an option. Of course there is always the possibility of missing something or not being skilled in a specialized area, which left unchecked could be a costly mistake. When it comes to mortgages there is greater complexity. Without a set standard of comparison, even senior bankers will not know for sure what the best interest rate is. The only way to know if your mortgage is fair is with an independent Mortgage Review.

Researching online with comparison tools are frivolous at best as they cannot review what actually matters, your 3-page Loan Estimate. Often any mortgage comparison is anything but unbiased. Rather the websites function as lead captures drawing consumers in with best case scenario teaser rates. Every person obtaining a mortgage should become familiar with the 3-page Loan Estimate. It is the banks guarantee to deliver on their offer and contains all the numbers regarding your mortgage, not just the interest rate. The interest rate is only one aspect of the mortgage, the points and fees are another; usually accounting for thousands of dollars.

A home inspector doesn’t sell you a home any more than a Mortgage Review sells you a mortgage. It works in your favor by empowering you as a consumer to be in the drivers seat when dealing with the banks.

The answer is different for if you are buying or refinancing

Buying a home.

You can cancel your mortgage loan up until the day you sign.  Whether you are pre-approved, approved, have a Loan Estimate, or signed an intent to proceed, you can cancel your mortgage loan for whatever the reason.  You are never locked into one lender until the day you sign at closing.  Keep in mind though, that the later you wait to change lenders or cancel your loan, the more money you may risk to lose.  This is because as the loan process continues certain fees are required.  For example, the purchase of an appraisal is often needed to be made prior to obtaining financing.  You also can risk losing your earnest deposit if you break a contract between you and the seller.

If an appraisal has already been done, and you switch to a different lender, you may need to pay for another appraisal.  This of course could not be a big deal in the great scheme of things.  Especially when the appraisal fee is $500 but you get a lower interest rate with the other lender saving you thousands.  Losing your earnest money is not always the end of the world if you decide to back out from a particular house.  Better to lose a few thousand than to make a several hundred thousand dollar mistake.  In order to cancel your pending mortgage you can simply inform the lender verbally. Of course, being unresponsive to the lender will also cancel the transaction.

Refinancing a home

Some may be surprised to find out that you can cancel your refinance after you have signed on the dotted line.  In fact, you have until midnight of the third business day after signing to rescind (cancel) the mortgage contract.  The three-day clock does not start ticking until these three events have happened:

1) You sign the credit contract (usually known as the Promissory Note)
2) You receive a Truth in Lending disclosure (in most circumstances, this will be your Closing Disclosure form)
3) You receive two copies of a notice explaining your right to rescind

You should note, that in this case business days include Saturdays, but not Sundays or legal public holidays.  To cancel your refinance you can use the form your lender gave you or write a letter.  Make sure the form or letter it is mailed or delivered before midnight of the third business day.  It is a good idea to keep a copy and any evidence that it was mailed or delivered on time.

What is they never gave me those documents

If you did not receive your Truth in Lending disclosure or the notice of your right to rescind, or if they were incorrect, you may be able to rescind your loan up to three years from the date of closing.  If this is the case consulting an attorney would be the best first course of action.

Quick Answer

By as little as nothing, 0% difference.  To as much as 3.25% of the mortgage amount…or more in rarer circumstances.

Semi-quick Answer

Consider a fixed rate 30 year conventional loan (the most popular type of mortgage loan) with a 5% down payment. FYI, a conventional loan is a mortgage that is not guaranteed or insured by any government agency. Still confused? Think of a conventional loan as a private investor lending you the money. This chart applies for most conventional fixed rate mortgages with terms greater than 15 years.  Meaning, an interest rate that does not change while you have the loan, and the length of your mortgage is more than 15 years.

From the chart, with a 740 or above credit score costs 0.25%, of the loan amount. With a 620 credit score, a charged 3.25% of the loan amount will occur. The difference between the two is 3%. For a 200k mortgage, a person with 620 would need to pay $6000 to get the same interest rate as the person at 740. This is a simply example will all things being equal, and with loans from the exact same lender.

For those who want More Details

Let’s understand this chart further. The numbers not in the blue are adjustments for what is known as the loan-to-value ratio (LTV). The loan-to-value ratio (LTV) is a financial term used to express the ratio of a loan to the value of the home purchased.

Example: Assuming the sales price of a home is the actual value.  With a 5% down payment, the LTV would be 95%. A 20% down payment, the LTV would be 80%….etc.

The LTV ratios are along the top of the chart and the credit scores that correspond with the LTV are along the side. The percentages on this chart are NOT interest rates. The percentages in the middle are a percentage of the loan amount charged to you. These charges (adjusters) are often adjusted into the interest rate. Hence why your friend with a 620 credit score would be paying a higher interest rate for the same loan. (With the same bank and the same loan officer.)

The difference in interest rate between these two credit scores is usually .75% to 1%. Your friend with a 620 credit score could be at a 5% interest rate, and you with the same loan could be at a 4% interest rate. A 1% difference over the course of 30 years makes for some big savings with the higher credit score. In fact, using a 200k mortgage, the person with the 740 would be paying $42,000 less in interest compared to someone with a 620 credit score.  Assuming again, you and your friend are using the exact same lender and loan officer.

Big Difference Between Lenders

I keep mentioning the exact same lender and loan officer. This is because rates vary greatly from bank to bank. They can even vary within the SAME OFFICE for the same loan, depending which loan officer picks up the phone. This may be shocking but it happens every day. A person with a credit score of 740 actually ends up with a higher interest rate than someone with a 620. Because they went to different banks. The 740 person was greatly overcharged by going to an overpriced lender. To avoid avoid getting taken advantage of by the bank, you can know for sure if your interest rate is fair by getting an individual mortgage review.

What you Need to Know About Origination Fees

Lenders that Charge Origination Fees

Essentially all mortgage lenders charge for origination fees in one way or another.  This includes banks, credit unions, and brokerages.

But what about mortgages that are advertised with $0 (zero) origination fees?

Let’s note first where these origination fees actually show up.  That is, the actual fees that banks are referring to when they mention origination fees.  Origination fees appear on your Loan Estimate.  Precisely on Page 2 Section A. Origination Charges.  If there is nothing in Section A, then one could technically state “there’s no origination fees.”  However, in reality, the absence of these fees are factored into a higher interest rate and/or lower lender credits.  In that sense a consumer will still pay for origination fees, it is just masked in one way or another.  Advertising “no origination fees” is a cute way to draw attention, but as stated, you’re going to be paying elsewhere for it, perhaps even more in the totality.

What you Need to Know

Aside from knowing that every lender charges these fees, you should also know that origination fees can come in a variety of names.  This makes it difficult to compare these charges from lender to lender.  There is no set standard on how the fees are to be listed within Section A, and the stipulations for the naming of the fees are pretty much non-existent.  Sometimes the name of a fee can vary by just adding or taking away a word, as you will see:

  • Processing fee
  • Loan Processing fee
  • Underwriting fee
  • Application fee
  • Funding fee
  • Document preparation fee
  • Preparation Fee
  • Office administration fee
  • Administration Fee
  • Rate lock fee
  • Mortgage rate lock fee
  • Broker service fee

These are just a few of the fees you may encounter.  Generally a lender will have a combination of two or three of these fees.  If you see any more than that, begin to start asking questions.   It is not so much the name of the fees we need to be concerned with.  But rather the total amount minus any points.  A point is a percentage of the total loan amount that you pay for.  Points are inversely related to the interest rate.  Meaning lower the rate, higher the points (cost you pay for that rate.)  This is why we need to subtract the points from the total in section A. so we can get an apples to apples comparison on origination fees.

The Loan Estimate

You should become familiar with a 3-page mortgage Loan Estimate as you will receive one from your lender for nearly every residential mortgage transaction.  This is mandated by law for your lender to give you, and the format is standard making it (somewhat) easier to compare loans.  I cannot emphasize enough the importance of the Loan Estimate because these are the numbers that will follow you to closing.  Out of all the paperwork you submit and sign, it is these 3 pages that are a necessity to focus on.  These 3 pages can seem overwhelming.  Don’t make the same mistake the Andrews made.  You can learn from them.

What are the Benefits of a 15 year loan Versus 30 year loan?

Less Years = Lower Rates…Most of the Time

In short, you generally get a lower interest rate with a 15 year mortgage loan compared to that of a 30 year mortgage.  Which means you will be paying less interest over the course of your loan. Usually, the lower the years of the term the lower the interest rate. (And I do mean usually, because MortgageLoanReviewUSA.com, that analyzes the fairness of loans, has seen on occasion 10 year terms having higher interest rates than 15 year terms.)

The 30/15 Year Compromise

Affordability is the number one reason people choose a 30 year term. This allows them the ability to buy more house and/or have lower monthly payments over the course of their loan. Of course, this costs them in the long run as far as total interest being paid. However, if disciplined enough, you can obtain a 30 year loan and add to your monthly payment what you would be paying for a 15 year loan. This is favorable to those who want to pay off their mortgage early, save some interest, but also remove that risk factor of being locked into a 15 year loan, having a job loss and not being able to afford the mortgage payment (or at least things being that much tighter on the wallet.) Generally speaking, there is anywhere between a 0.5% to a 1.0% difference in interest rate when it comes to 30 and 15 year mortgage terms for Conventional loans. (FHA and VA loans tend to have a larger spread.)  We will use 0.75% as the difference in interest rate between a 30 year term and a 15 year term. Let us go through an example to see what the actual difference would be. Then compare it to real life among the average homeowner.

Example: $300,000 mortgage

  • 30 year at 5.25% – $1656.61 monthly; $296,380 total interest
  • 15 year at 4.5% – $2294.98 monthly; $113,096.38 total interest
  • 30 year added payment at 5.25% – 2294.98 monthly; $146,016.02 total interest

Being at a straight 30 year mortgage term means a ridiculous 183k more in interest compared to the 15 year term. However opting for a 30 year and being disciplined enough to set up the additional difference in payment would mean you’re paying roughly 33k more compared to the 15 year term. Again, the benefit in this is that if you ever had a decrease in income, or wanted to save for that yacht, you would have the option to stop putting the additional $638.37 on top of the $1656.61. (638.37 1656.61=2294.98)

Real Life

Now I mentioned comparing it to real life among the average homeowner. Two things: 1) Some may lack the discipline to set up the additional payment amount or are tempted to cave and remove it to go on a shopping spree.  2) In recent years, most homeowners resided in their home for an average of 10 years. With the example above ($300,000), we can see what the first 10 years of interest payments would look like:

  • $145,713.74 in interest paid in the first 10 years of the 30 year loan
  • $98,960.51 in interest paid in the first 10 years of the 15 year loan
  • $121,413.88 in interest paid in the first 10 years of the 30 year loan with added payment

Being at a straight 30 year term means 46k more in interest paid during the first 10 years compared to the 15 year term. And with the 30 year added payment scenario, you would be paying about 23k more in interest compared to the 15 year term.

What it Means

To sum up, keeping your payments the same, in the average homeowner real life scenario you would save about double the interest by choosing the 15 year term as opposed to a 30 year term with the added payment. But as mentioned, a risk with the 15 year would be if you needed to lower your monthly payments for whatever the reason. If you did need to lower the payments on a 15 year loan you would only be able to do this by refinancing into a longer term. Refinancing would cost money, could lead to a higher interest rate (or lower depending on the market) and may not be an option if there was a large decrease in the value of the property, income, credit score etc… Sadly, this is how some people end up losing their home. Regardless of what mortgage you end up going with, make sure that you are getting a fair deal. Either do this by shopping around comparing multiple Loan Estimates, or by getting a 3rd party review of your mortgage before signing with Mortgage Loan Review USA.  You’d get a home inspection, why not a loan inspection?

There are Two Common Types of Mortgages that Allow for a Zero Dollar Down Payment

USDA Loans

USDA stands for United States Department of Agriculture. USDA loans help those with low to mid-income ranges and is available mostly everywhere outside of large metropolitan areas. There are income limits and other guidelines that take place, however, ultimately they are a great choice for those living out of the city as a USDA loan comes with many benefits.  Most notable benefits in addition to a $0 down payment are:

  • Lower interest rates compared to other common types of mortgages
  • Lower monthly mortgage insurance than that of convention or FHA loans
  • Flexible credit guidelines that allow for exceptions for those with poor credit

Learn more and see if you qualify for a USDA loan Here.

VA Loans

VA loans are another common type of mortgage with a zero percent down payment. VA stands for Veterans Affairs. As the name would suggest, a VA loan is available for those who are active or retired military, or surviving spouses of a veteran. The Department of Veterans Affairs requires a funding fee (a percentage of the loan amount to be paid) but even this can be rolled into the mortgage and financed as part of your monthly payment. VA loans have no mortgage insurance either. This in of itself can save hundreds of dollars off of a mortgage payment.

More information on the requirements and benefits for VA loans can be found Here.

Remember

Know your rights as a consumer and realize that your mortgage is negotiable. A person can save thousands by asking for a fee to be removed, by shopping around and comparing Loan Estimates, or by obtaining a Mortgage Review which ensures the interest rate and fees are fair.

Don’t we wish it were an Easy Answer

Wouldn’t it be nice if we could know for certainty we have a good interest on the largest purchase of our lives.  There are many factors that come into play when determining if your interest rate is good/fair.  Here is a list to show you a few:

  • Credit score
  • Type of loan (conventional, FHA, VA, cash-out refinance, rate and term refinance, ARM’s…)
  • Type of property (house, condo, manufactured home…)
  • Loan Amount
  • Purpose for loan (primary home, rental, 2nd home…)
  • Down payment amount
  • Price of the property
  • Origination charges the lender has
  • Points (usually a cost to lower the interest rate)
  • Lender credits (usually money received for accepting a higher interest rate)
  • If there is lender paid PMI
  • APR
  • State the property is in
  • Even the Zip code you are buying or refinancing in are all variables that come into play

Overwhelmed yet?

Keep in mind that just because one has a low interest rate, that does not necessarily mean that the loan is fair.  Mortgage fees and points can far out weigh any interest rate making a mortgage unfavorable.  In reality there is only one way to know for sure if your proposed mortgage is fair.  That is with an independent mortgage loan review that analyzes the quality of your mortgage Loan Estimate your lender will give to you.

It is all about the Loan Estimate

The mortgage Loan Estimate is a standardized 3-page document that your lender is required to give to you once they have received 6 key pieces of information.  Those 6 key pieces of information are:

  • Your name
  • Your income
  • Your social security number to pull credit
  • The property address
  • An estimated value of the property
  • and the desired loan amount

Mortgage lenders are not allowed to require you submit any documentation to verify such said information.  Meaning before they send you a Loan Estimate they cannot require you to submit bank statements, a purchase contract, pay stubs, etc…  Because of this it benefits a consumer greatly.  It allows a consumer the ability to quickly compare Loan Estimates from multiple lenders without being bogged down scrambling for paperwork.  Once a lender has those 6 pieces of information they must provide you a Loan Estimate within 3 business days.

Two other things that may better your loan

Aside from purchasing an independent Mortgage Review of your Loan Estimate you can do two other things that may better your loan.

  1. Negotiate
  2. Compare other lender’s Loan Estimates

Negotiating can save you some money.  Simply asking them to wave a fee is one way.  To be specific the fees that are negotiable are under section A of page two of your Loan Estimate (Origination Charges.)  It can be difficult to know if a fee is high or if there are excessive fees.  However ‘playing hard ball’ by requesting a fee to be removed is one way to get the upper hand when negotiating your mortgage.  Therefore, be careful that if a fee is removed the interest rate other origination charges have not increased on the Loan Estimate.

Comparing lenders can work by comparing multiple Loan Estimates.  Do you notice a theme?  Again, it is all about the mortgage Loan Estimate.  Because of this you may really need to educate yourself to be able to compare apples to apples.  Taking into consideration the interest rate, origination charges, points, any lender credits, and lastly the APR.  Most importantly the APR (annual percentage rate) can be used to compare the decency of a loan over the course of the whole term.

Conclusion: How to Help Ensure You Receive a Fair Mortgage Loan

In conclusion, paying for a third party service to analyze your mortgage Loan Estimate will ensure you get a fair deal on your mortgage.  It will help you in your negotiation knowing if the interest or fees are high and how to best proceed.  It will save you the time it takes and the education needed to compare multiple Loan Estimates.  The ultimate take away is that not all mortgage loans are they same.  There is a large variance among lenders, but with some elbow grease of your own or the use of a Mortgage Loan Review, you can save yourself thousands in needless interest.

High Hopes for a Fair Mortgage Loan and Great Home-Buying Experience

The Andrews were excited about buying a new home. After getting pre-approved for a mortgage loan, they found their dream home and made an offer that got accepted. The Andrews had a home inspection to make sure everything was in ship shape. “I’m sure glad we are not buying a lemon of a house,” Mrs. Andrews said to her husband.

Their loan officer gave the Andrews a Loan Estimate and explained to the them the cost of the loan and how the numbers on the estimate would be on their closing documents. Over the next 30 days the Andrews became overwhelmed with paperwork, their jobs and children and packing for the move. They wanted what began as a fun experience to be over with. Eventually they received a bottle of wine as a house warming gift and the keys from their Realtor.

Sobering Reality: Mortgage Loan Over-Payment

Did the Andrews make any mistakes? They followed the popular home buying process from getting pre-approved to having their home inspected to providing the necessary paperwork. Little did the Andrews know they overpaid by tens of thousands of dollars for their mortgage and would be struggling with high monthly payments for the next 30 years. Today they are stressed and feel they’ve been cheated.

How to Get a Fair Mortgage Loan and Avoid Over-Payment

What could the Andrews of done differently to avoid the pitfall of mortgage regret?

First Option: Negotiate Mortgage Loan Interest Rate and Fees

One way would have been to ask their lender for a lower interest rate or fees. Mr. Andrews did not realize he could have utilized his negotiating skills just as he had done before with the purchase of his minivan. He would of had to be careful, watching to ensure that when the interest rate was lowered there was not an increase in fees.

Second Option: Shop Around for a Better Mortgage Loan

A second way would have been to shop around. “We didn’t know this, we just figured all mortgages were the same,” Mrs. Andrews stated. Here again, the Andrews had to learn how to carefully compare multiple Loan Estimates. It would have been time consuming. In the end they may have saved money, but their mortgage may have been just less of a bad deal. “Is there a way to know for sure your mortgage is fair?” the Andrews cried out. Yes, it was the third available option.

Third, Better Option: Get a Mortgage Loan Review by a Professional Third Party Expert

The Andrews could have had a review of their Mortgage Loan Estimate. With an independent third party review they could have known for sure if their lender was treating them fairly. If something needed to be negotiated the Andrews would know exactly what it was and by how much it should be lowered. If need be, they could have found another lender that would match what they knew to be fair.

Conclusion: How to Help Ensure You Receive a Fair Mortgage Loan

The Andrews had a home inspection, but failed to get a ‘loan inspection,’ which would have prevented a lemon of a mortgage. “We wish we would have gotten our Loan Estimate reviewed,” the Andrews sadly admitted. Make use of the above three methods to avoid having mortgage regret like the Andrews. Additional information on Loan Estimate reviews can be found at MortgageLoanReviewUSA.com Ensure that your home loan is a fair home loan.