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Tips to Protect Yourself and Your Home When Applying for a Mortgage

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RISMEDIA, August 29, 2007-Many homeowners who were forced into foreclosure didn’t fully understand their mortgage. Don’t make this mistake. Many loan officers fail to disclose all aspects of the loan and closing cost; spending the extra 20 minutes asking these questions can mean the difference of keeping your home or losing it to foreclosure.

These questions will also help you avoid a bait and switch on the interest rate and closing cost. Don’t assume anything and don’t be afraid to ask every question.

- What is the standard loan industry name of this program?
- What is the loan amount? Does that include any or all closing cost?
- What is the interest rate? How many years is the rate fixed for?
- How will my rate be calculated if my rate adjusts? What is my margin?
- What index will be used? How often will it adjust? What is the initial adjustment rate cap? What is the annual rate cap? What is the lifetime rate cap?
- How many years is the amortization period? Is there a balloon payment? When is it due?
- Is the payment a minimum payment, an interest only or principal and interest payment? What loan amount was that calculated off of?
- How long is the interest only option available for? What happens after that period is over?
- Can this loan ever have negative amortization? If yes, what are the terms?
- Is there a prepayment penalty? If yes, what is the penalty?
- What documentation type is this loan? What documents will I need to supply?
- What debt to income (DTI) ratio was used to qualify me? What was the dollar amount of debt that was used for the DTI ratio? What was the dollar amount of income that was used for my DTI ratio? What is the DTI ratio limit for this program?
- What credit score did you use to qualify me? How did my credit score effect the pricing and how might pricing change if my credit score drops during processing of the loan?
- What loan to value was used to qualify me? What happens with pricing if the appraisal comes in low? Will there be Private Mortgage Insurance (PMI)?
- How many total points for this loan? What is the dollar amount of the cost of points?
- Are there any origination points? What is the dollar amount?
- Are there any discount points? What is the dollar amount?
- What are the lender fees? What closing cost do I have to pay?
- What are the prepaid items that will be apart of closing the loan? Will there be an escrow account? How many months will be needed to set the escrow account up?
- What are the third party fees? How much is appraisal, title charges, notary, recording and escrow fees?
- Are there any government fees from the state: mortgage tax, doc stamps or intangible tax?
- How much will be out of pocket? How much will be added on to the loan balance?
- How many days is the rate lock for this loan? What will be the charge for a rate lock extension if I need one?
- Do you guarantee your rate and closing cost in writing instead of just a good faith estimate?
- What is the process to lock in a loan? Are you locking in the rate, points, and closing cost? Can I get a written lock in confirmation? What happens if I cancel the loan?

For more information, visit http://LoansConfidential.com.

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