San Diego Mortgage Basics

When it comes to finding San Diego mortgage loans, there are plenty of programs to choose from. Of course, this means you need to understand San Diego mortgage basics.

San Diego Mortgage Basics

The first thing to understand about San Diego mortgages is you must shop around. It is a misconception to believe that all lenders offer the same terms. They simply do not. Much like you would shop around for the best deal on a new car, you must do the same with your mortgage loan. Let’s take a closer look at San Diego mortgage basics you should understand.

One of the basics you need to pay close attention to is the interest rate on your loan. I am sure you already know this, but there are a couple aspects of mortgage loan interest rates you might not fully understand. The first is the teaser rate. A teaser rate is the advertised or offered rate at the outset of the mortgage. While a low initial rate is great, you really need to focus on what happens in a few years when the teaser rate expires and a higher interest rate is charged. Simply put, are you going to be able to handle the increased monthly mortgage payment on your San Diego home?

A second basic area you want to focus on is lock in terms of San Diego mortgage loans. “Lock in” refers to the number of days the interest rate of your loan is binding on the lender. Rates move up and down daily, which can cause problems if your lock in expires. Consider the following example. You get pre-approved for a loan at 5.125 percent and the lock in is good for 30 days. You find a home you like, make an offer and enter into a 45-day escrow period. When escrow closes, you may be in for a nasty surprise. The lock in will have expired. This can result in higher monthly payments, which squeeze you from the perspective of month cash flow issues.

When it comes to San Diego mortgage basics, the third area you should focus on is the lender terms. Lenders typically quote terms for interest rates, points and fees. It is vital that you understand that lenders offer a wide variety of loans, not similar ones. One lender may offer terms that will run you $50,000 more in interest payments over the life of the loan compared to another. Shopping your borrowing needs is the key to dealing with this issue.

At Great Western Mortgage, we offer services for people seeking the best terms on home financing. If you have questions on San Diego mortgage basics or are interested in finding out your options, please contact us for a no-obligation consultation.

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