Articles about Buying a Home in Montana

How to Get a Mortgage

This is the first part of a series of short articles about the real estate mortgage process.

Choosing a Lender and Getting Pre-Approved for a Mortgage

It is wise to know what you are getting into, before you get your hopes set on a particular home. The best way to be sure you are shopping in the right price range is to get pre-approved with a lender. By getting pre-approved in a certain price range, you will be sure your REALTOR is showing you the properties that will satisfy your goals and work within your budget. A good lender will help you analyze your over all financial situation so that you can live in your home, and avoid undermining your long term financial goals.

Here are some tips on finding a lender that will be 'on your side'. There are many good lenders in the Polson and Flathead Lake area that you can work with locally before going out to a 'virtual' lender.

• Check with your bank first, even if it sounds like there is a better deal somewhere else. It is important to give your bank the first crack at your business, even if there are lower rates or more credit flexibility somewhere else. In the current lending climate, all financial institutions need to be competitive and your local lender is more likely to look out for your best interests.
• Shop rates between your bank, a mortgage broker, and on-line. It is recommended to balance service and trust against the rate, but the rate of interest is obviously one of the most important factors. When you are comparing rates, keep in mind you will have to root out the hidden fees, and possibly 'points' charged on the loan. Points are pre-paid fees that in effect 'buy down' your interest rate. This can be a good thing in some cases, but remember that you are going to have numerous other closing costs and fees before all is said and done. These fees can add up quickly and in some cases are more than your actual down payment, so beware and plan ahead for the total cost of your home at closing. If you are working with a trustworthy lender, they will disclose these costs and make them clear. Don't be too quick to sign documents indicating they were explained to you, unless you really understand them in full. It's easy to start scribbling your initials and signature in block after block when you are under the scrutiny of the lenders credit checking eyes so just take it slow, read, and ask questions when they arise.
• Watch out for low-ball rates. On-line lender and mortgage brokers sometimes quote very low rates initially. When you actually sign the deal, they charge a higher rate explaining that "the market has moved". This tactic is easy to spot. If the lender's rate is much less than the best competitor, the rate is too good to be true.

For more information on choosing a lender follow the link below for a brochure provided by the U.S. Department of Housing and Urban Development.

* HUD Buying Booklet for Choosing a Mortgage