May 22, 2008 // Franchising.com // MORRIS PLAINS, N.J. – News headlines of the past year have made one reality abundantly clear: As a homebuyer, you need to give as much serious thought to your mortgage options as to the location and amenities of the home you purchase.
So what do you need to know to secure a mortgage that's financially right for you? According to Weichert Financial Services, an affiliate of Weichert, Realtors®, following these few basic guidelines will help you make a sound decision.
While major lenders like Weichert Financial Services may literally offer hundreds of mortgage products, most fall under one of two main categories: fixed-rate or adjustable.
"Fixed-rate mortgages offer tremendous peace-of-mind," said Stephen Adamo, president of Weichert Financial Services. "Even if interest rates soar down the road, your monthly payment for principal and interest is unaffected. For buyers who intend to stay in their home for the foreseeable future, these loans can be a logical choice."
The 30-year, fixed-rate mortgage is the most popular by far, he said, although the loan term can be stretched out even longer to lower your monthly payments – or shortened, say to 20 or 15 years, to enable you to own your home outright that much sooner and save tens of thousands of dollars in total interest paid.
Do you expect to move or trade up in a relatively short period? Then an adjustable-rate mortgage, or ARM, can make financial sense. Because ARMs offer considerably lower interest rates at the start compared to fixed-rate loans, the monthly payments are more affordable – and may allow you to qualify for a more costly home.
ARMs come with uncertainty, however. After the initial fixed-rate period – which might be 1, 3, or 5 years, for example – the loan rate will adjust at regular intervals that may be as often as every six months. "With an ARM, there is the potential for future savings if interest rates go down, but if rates go up, your monthly budget will need to be able to handle monthly payments that could be substantially higher," Adamo said.
There is no such thing as a "dumb" question when dealing with something as important as selecting a mortgage. If a mortgage representative is throwing out terms like "rate caps" that you don't fully understand, ask him or her to slow down and explain exactly what that term means and how it applies to loans you're considering. Responsible lenders like Weichert Financial Services want you to be an informed borrower.
In fact, Weichert feels so strongly about educating perspective homebuyers that it has launched an intensive marketing campaign entitled "It Pays to Ask!" The campaign encourages those thinking about buying a home to reach out to their local Weichert professional and ask questions to become familiar with the overall real estate process. In addition, Weichert regularly hosts free home buyer seminars for customers that would like to learn about the mortgage options available to help them purchase a home.
Adamo said, "In every company-owned Weichert, Realtors office, you'll find one of our mortgage consultants, called Gold Services Managers, who will gladly provide free mortgage counseling, give you a pre-purchase mortgage credit decision within 24 hours, and help you knowledgeably weigh your financing options.
Be wary if your questions are being brushed off or if you feel you're being talked into a particular loan. And keep in mind that a dazzling Web site or plush office is no guarantee of sterling professional credentials. One survey, conducted by Campbell Communications on behalf of Inside Mortgage Finance Publications, found that a shocking 39 percent of mortgage pre-approvals from Internet lenders fell through due to lack of proper verification, as did 27 percent from mortgage brokers.
"Choosing a responsible lender is your best assurance that the mortgage money you've been promised will be there for you at closing – and that your mortgage is one you can happily live with, today and tomorrow," said Adamo.
Adamo added that with mortgage guidelines changing every day, you'll need a lender that is on top of these changes and one that can offer a wide variety of options.
Weichert Financial Services is one of the "Top 35" lenders in the U.S., according to the industry newsletter "Inside Mortgage Finance," based upon sales to Fannie Mae and Freddie Mac in the fourth quarter of 2007. In an August 2007 study assessing the credit standards of the nation's lenders, SMR Research Corp. ranked Weichert Financial Services among the least risky and most reliable. The quality of its products is in the top five percent, according to Radian, a leading mortgage insurance lender.
Weichert has nearly 18,000 sales associates in over 500 company-owned and franchised sales offices in key markets throughout the U.S. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. For more information, call Weichert's customer service center at 1-800-USA-SOLD or visit Weichert's Web site, www.weichert.com. Each Weichert franchised office is independently owned and operated.