It might not take an international secret agent like James Bond to get a great mortgage, but picking up a few pointers from the professionals doesn’t hurt either.

While most people look primarily for the best mortgage rate, an attractive mortgage is more than just the best rate.  Both lender’s fees and prepayment penalties can put thousands of dollars between you and owning your home.  Here are some pointers to help you acquire a mortgage fully equipped with “all the usual refinements” and save thousands on financing your (real estate) home.

Ask the right questions and go with your intuition.
Mr. Bond never needs to ask a lot of questions, but he always knows the right ones to ask.  Likewise, you should feel free to ask questions until you feel comfortable with the mortgage you have selected.

Similarly, don’t be afraid to ask questions about the lender’s or broker’s fees, which may also include points.  According to the Real Estate Settlement Procedures Act and Regulation Z of the Truth in Lending Act (TILA), the lender is required to fully disclose the cost of borrowing before your mortgage loan is finalized.

Always have an escape route available.
In the world of fictional espionage, there seems to always be a way out of every sticky situation.  In mortgages, this is not always the case.  However, one way to keep an escape route open is by opting out of a prepayment penalty loan.  This will come in handy if life decides to throw any unexpected curves your way.  For instance, you may plan on buying and living in a house for 20 or 30 years.  But what happens if you have an unexpected career change or life event that requires you to sell the house during the first few years of owning it?  Or what if rates drop next year and you would like to refinance?  As long as you don’t have a prepayment penalty, you can either sell or refinance your house as needed without paying a hefty fee.  Prepayment penalties can be effective anywhere from the first six months to three years into the mortgage loan.  Thus, this decision depends on how much flexibility you anticipate needing in the near future.

Furthermore, in addition to the aforementioned full disclosure of fees, Regulation Z of TILA also stipulates that for refinanced mortgages, through the right of rescission (or cancellation), the consumer has three business days to cancel their new loan without penalty.

Never fall for the tricks.
In the classic spy flick, the villain’s antics are typically predictable.  Similarly, the popular “bait-and-switch” move is one of the oldest tricks in the marketing book, so don’t fall for it.  Many financial institutions that offer mortgage loans use their best rates and lowest fees to lure customers into their establishments.  However, there may be stringent requirements to qualify for the advertised offer.  Often times, if the consumer does not meet all the requirements, they will then be offered a higher rate.  To avoid falling victim to this predictable scheme, research mortgage rates before going to the financial institution, and know your credit score.

Use the resources available, such as the Internet, to research and become knowledgeable about mortgages and you’ll see that with a little preparation, it doesn’t take a super spy to find a great mortgage.

Source: Informa Research Services