Use a mortgage comparison worksheet to compare your possible loans. Start with the fixed rate loan as Loan 1. Loan 2 would then be the fixed rate loan with a buydown. Loans 3, 4, and 5 would be the adjustable or hybrid loans that you have selected as the best ones to consider.
The monthly payment and the break-even period are included at the bottom of the chart to emphasize the true monthly payment and not the start rate payment. A teaser interest rate has not been added, as the less emphasis you put on it, the better. It is not an easy task to get the absolute best mortgage loan for you. By due diligence, however, you can get a good loan. The following are important requirements to get the best loan you can.
• Look at the loan in its entirety, not just the low start rate or low beginning monthly payment. This will help you avoid being drawn in by ads for teaser rates and low monthly payments that cost you more in the long run.
• Have all the prequalifying information in writing before you start shopping for a home or a mortgage loan. This includes your credit report and any explanations you may have for credit problems. Do not count on a loan representative or mortgage broker to tell your story to the underwriter. If you write it down and it goes in the package, you have a good chance that the underwriter may consider it.
• Make a genuine effort to realistically know what you could pay on an adjustable loan if rates increased. This can only be done by a careful examination of your debts and spending habits.
• Consult with an independent counselor whenever possible. Be sure that the counselor is truly independent, not someone recommended by your lender or mortgage broker.
• Above all, do not sign anything that you do not understand, and get all promises in writing whenever possible. It is easy to make verbal promises. Most people do not write them down unless they intend to keep them. Always write down the name of the person that you talk to on the phone.
Finally, good luck in finding the right mortgage loan for you. You will find that the more you prepare, the luckier you will be.