Broker Check

The Mysteries of Mortgages Unraveled

| August 31, 2016
Consumer Debt

With home ownership in the United States now approaching 70% of all households, the chances are good that you've either taken out a mortgage in the past or have one now. However, many homebuyers don't take out a mortgage as carefully as one might imagine given the amount of money borrowed and the huge difference even a few basis points (one one-hundredth of a percentage point) can make over lengthy loan.

Instead, homebuyers often search for the home they want, then apply for a mortgage and hope for the best. A far better approach is to find out how much mortgage you can qualify for, then look at homes you know are in your price range. Known as "prequalification," having this piece of paper in your hand can also set you apart as a serious, committed buyer in hot real estate markets where properties are fetching multiple offers.

You may be able to lock in a mortgage rate when you pre-qualify, so you know exactly how much you'll spend each month. If possible, ask the lender to agree, in writing, to lower your rate if rates go down before actual purchase of the home.

Finding Objective Mortgage Data and Information

Numerous businesses and institutions provide impartial mortgage research to the public, usually at no charge.

HSH Associates tracks mortgage rates nationwide and will sell you a printout of lenders and rates in your area. You can call 800-873-2837 for more information, or visit their website at

Consumer Reports Home Price Service will give you information on property prices and sales figures in your area. Their telephone number is 800-775-1212.

Bank Rate provides information on the prevailing rates of different types of mortgages as well as a list of local lenders and their current rates. Their website is

Alternative Sources of Mortgage Loans

There are also several programs that offer help for those home-buyers whose income level is less than what is usually required to qualify for a mortgage. They include the following:

FNMA and Farmer's Home Administration. Their telephone number is 800-732-6643

U.S. Department of Housing and Urban Development (HUD).

Many states provide low interest and low down payment mortgages for first-time buyers if they meet state guidelines. Check the state government section of your telephone book for their number.

VA (Veteran's Administration) enables qualifying veterans to borrow with little or no down payment. Call the VA local number listed in your phone book for details.

FHA (Federal Housing Administration) mortgages let you borrow up to 95% of the price of a house if the price and closing costs are within their guidelines. Check with your lender or directly with FHA for more information.

Who Offers Mortgages?

Practically all financial service companies, including many brokerage firms, have entered the mortgage market. This would include banks and credit unions, developers, mortgage brokers, and mortgage companies or mortgage bankers. Shop around and you'll likely be pleasantly surprised at the wide range of loan types and terms you'll be offered.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice.  Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Past performance is no guarantee of future results. Diversification does not ensure against loss.