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Originally Posted by wolf
Hey, pretty much I would suggest what has already been suggested. My wife and I recently bought a house, so we know some of the pit falls. Here are a couple of things to watch for.
2. Watch out for crook mortgage brokers who want to make a buck and get you into a horrible loan. Don't take a variable rate mortgage unless you absolutely have to. Get into a fixed rate mortgage. Try to find one without a prepayment penalty. Also we just closed a loan with a broker who paid all of our closing costs - 100%. The only things we had to pay for was the appraisal (which they credited back to us) and the money to establish our escrows. So, try to find a bank or mortgage company who will pay for the closing costs.
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I'll elaborate on this.
I wouldn't say avoid a variable rate mortgage at all costs - base the type of loan that you chose on how long you are going to stay in the property.
For instance, if you are absolutely certain you'll be out of the property in four years, getting a 5 year ARM wouldn't be a bad idea.
As far brokers go - I agree - watch out for those that are greedy.
However, if you are planning on staying in the property for an extended period of time, I'd recommend paying the costs yourself.
Although it may seem like a great deal for the broker to pay them, they basically can do so by increasing the rate a bit. It would be much better long term to pay your costs up front and have .25% lower rate for the next thirty years than it would be to have the costs worked in at the higher rate.
However, if you are only planning on staying in the property a short time, feel free to have the costs worked in.
If' you're unsure what do to, ask the mortgage broker how much your rate would be with as well as without the costs paid for by them. See what the difference in payments would be, and calculate how long it would take to break even. If you're going to be in the property longer than the break even point, pay them up front. If not, have the broker pay them.