Or at least have someone that you trust read the fine print. This has never been more important than it is now in the mortgage industry. You see, people are choosing their mortgage broker, and mortgage product based on marketing and advertising alone, and not doing any further research.
The old adage, “if it is too good to be true it probably is”, applies here. You see some brokers and lenders are offering really low rates…lower than the average. When you see this, it is a good idea to find out what the mortgage is really about.
Here are the top 3 ways, not reading the fine print can hurt you:
1) The mortgage is completely locked in for any length of time (usually 3 years). If you sell, you can get rid of the mortgage, but other than that, you are STUCK. No refinance. No changes, nothing. With this one, they really got you buy the you know what’s.
2) No pre-payment privileges. This could cost you over $10,000! Even making small extra payments can save you so much money. My clients are on payment a plan, which puts them light years ahead; however, you cannot do any of this without pre-payment privileges.
3) Not portable or assumable. They are features that are going to be increasingly awesome, as rates rise in the future. Think about this. You don’t want to live in your current place in 3 years. Rates are now 5%. If you mortgage is portable, than you can move to a new place, and take that mortgage with you. If you mortgage is assumable, then it can be taken over by a qualified buyer. Think about that…you are trying to sell your home (in 3 years), and there are 5 other homes similar to yours for sale, but instead of taking the 5% currently offered in the market, they can have your 3.09%. Makes your home look way more attractive.
By not having these options you are leaving thousands of dollars on the table, letting the lender control everything you do, and potentially putting yourself in a really tough spot in the future…for what, so you can brag about you low rate? I’ll take the thousands in savings, thanks!