Shopping for a home loan can seem just like a hurried trip to the grocery store: You grab a cart and roam the aisles. You browse. You deliberate. You compare. It seems you're doing everything right, but the shelves are jam-packed, and the choices are overwhelming. Too late, you realize your mistake: you've gone to the store hungry, and everything looks good. You take a deep breath. What now?

Well, as any smart shopper will tell you, it pays to make a list of the things you and your family really need before you shop. It's that way with home loans, too. So let's make a list! Here's a brief look at a few important points you'll need to consider when shopping or the perfect home loan.

One of the first things you'll need to know before you shop is the concept of points. Points -- sometimes called loan origination fees or discount points -- are charges that lenders add to your load to entice potential market investors. Since no two loans are alike and no two lenders will apply the same number of points to any given loan, it pays to remember a few very important facts:

One point = 1% of your loan amount

A low interest rate with high points can be a deceptively expensive proposition

A high interest rate with low points is often the smart choice

If you choose to pay your points up front, they're tax deductible in the year you pay them

Many people who apply for a home loan are shocked when they receive a hefty bill for lender's fees. They get what appears to be a great loan with a reasonable interest rate and low points, and still get soaked because they didn't read the fine print. Here are a few hints to help you avoid these "hidden" charges:

Read all forms carefully, and always ask about lender's fees right up front

Remember that lender's fees are not the same as closing costs

Be ready to be charged for application, document preparation, underwriting, tax work, and document review

Bear in mind that some lenders bundle their fees at one flat rate, but many charge separately

If comparing points, fees, and interest rates makes your head spin, don't despair, There is a fairly simple way to effectively compare loan costs. It's called the Annual Percentage Rate (APR). Here's how it works:

The APR combines the regular interest rate, points, and other incidental charges

The APR is calculated by dividing these charges by the terms of the loan for a flat annual rate

Even a load with a low APR will contain certain lender's fees (see Ask About Lender's Fees)

For more information on APRs, please call.

It comes as a happy surprise to many buyers that they can often get a terrific home loan and still pay less than the standard 20% down. In most cases, these buyers will need to purchase Private Mortgage Insurance (PMI). Here are a few basics:

PMI protects the lender against loan default

You may be bale to include your first year's PMI premium in the amount of your loan

In some cases, you may be able to use part of your loan to cover certain closing costs

Though PMI has many things in its favor, it can also reduce your qualifying loan amount and limit your purchasing options

If you're applying for an FHA or DVA (Department of Veterans Affairs) loan, you can hasten the approval process by making sure your lender has the proper endorsements. Here are a couple of points to remember:

A DVA automatic or FHA direct endorsement means that your lender has met all government requirements, and that their underwriter has completed all mandatory courses

You can trust a properly endorsed lender just as if you were taking your application directly to an FHA or DVA office

Interest rates soar. Interest rates plummet. And somewhere in the middle is you, trying to get a solid loan at a fair rate. So when you find an interest rate that you're happy with, it's crucial to secure (or lock in) that rate for the duration of the transaction. It works this way:

Most lenders will be happy to lock in an interest rate for you, and some will lock in points as well

Fees for a lock-in are generally between 0-1% of the loan amount

The length of a lock-in varies from lender to lender

Make sure that your lock-in agreement is in writing, and that it lists both interest rate and points, if applicable

There were times when pre-payment penalties on home loans were an industry given, but those days are gone. Even so, it still pays to find out up front to avoid nasty surprises down the line, There are even times when pre-payment can be to your advantage, such as when you're planning to resell or refinance. If you're going to prepay, notify your lender of your intent in writing, and make sure that both of you have a copy.

As it is with all great journeys, the first step you take will be the most important. Make sure that the guide you choose is both trustworthy and reliable, because they'll be with you for the duration. Take a look at the following pointers; if you still need some help, please call for the names of respected lenders with proven track records of results.

Before you choose, ask people you trust if they know of any experienced, reliable lenders

Processing times vary between lenders; by making a few phone calls you can find one who meets your time constraints

Know your lender's policies before you commit to working with them

If you've already chosen and aren't happy with a push or unpleasant lender, change lenders!

Tomi Johnson
Realty One Real Living
3994E. Harbor Rd
Port Clinton, OH 43452
888-807-4110 toll free
419-341-0276 cell phonel
419-734-7260 fax
tomi@vacationlandconnection.com