Realtor Safety Tips

Your job is important – and so is your safety!

Work During the Day

Show properties before the sun sets. If you have too much work and know that you will be working after hours, schedule the in-office work to be done after dark. If you are going out or meeting with a client, do it in the sunlight. If you don’t have a choice but to show a property after the sun sets, make sure you let at least two other people know where you are going and with whom. Make sure that you turn on all the lights in the home and keep the blinds up if you are showing a property at night, so that anyone outside the home can see exactly what’s going on inside.

Create Prospect Identification Forms

So that your office has information on all of your clients, take a copy of each client’s ID and scan it into your computer. Then, ask them to fill out a short prospect identification form – with name, phone number, address, email address, etc. When you are done with the information, make sure you properly discard it. Having a file on your clients helps in other ways too – if you are out of the office, your coworkers can see the client’s file – and the information can be used for marketing purposes later.

Don’t Be Too Public

Don’t share a lot of personal information with your clients. Do business with business contact information, not your personal cell phone number and email address. Don’t put your personal information on business cards or flyers, and don’t use your middle initial or your maiden name if you are a married woman. Use your office address instead of your home address. Don’t tell your clients (even in friendly conversation) where in town you live or about your family. Giving out too much information can make you a target for spam calls, identity theft, and worse.

Run Open Houses Wisely

At the end of an open house, don’t assume that everyone has left the building just because all the cars outside are gone. Check all of the rooms, closets, cabinets, and the backyard before you lock the doors. If you don’t feel comfortable closing up an open house by yourself, call your local non-emergency line to ask an officer to clear the house for you – or hire a security agent for the evening.

Tell Your Clients About Stranger Danger

Everyone tells their children not to talk to strangers  – you should say the same to your client. Advise them to never show their homes or host open houses on their own. Tell them not to talk to other agents or buyers without you as a middleman, and to refer all inquiries to you. Alert them that not all agents, buyers, and sellers are not always who they say they are, and that they should be safe.

Wear Your Realtor ID

Always wear visible company identification like a badge. You should also clearly mark your vehicle with your company name. If you ever need to get into a neighborhood that has a security gate, identify yourself quickly with a homeowner, or require assistance from the police when showing a home, this identification will be invaluable. It also acts as a visual cue for clients and open house visitors – the more often they glance at your name tag, that’s another time your name and the name of your business has gone through their mind.

Walk in the Back

When you’re showing a home, always have your prospect walk in front of you. Direct them from a position that is slightly behind them, but not exactly. If things somehow end up with you in the front, slow down a little bit to allow them to catch up to you – then at least they will be at your side, not behind you, where you cannot see them or what they are doing, and where it would be easy to overpower you.

Protect Your Electronics from Viruses

Safety goes beyond personal safety – you must also protect your business and the computers in it. Viruses can destroy computers, and viruses that steal information can take the details on every single client you’ve ever had. Never open an email from someone you don’t know, and if you get a strange message from an email address that you know, check with that person to make sure that they were not hacked before you open their email. Be aware of the websites you visit, and don’t give your information out all over the internet.

Check for Cell Service

When you’re showing a property to a prospect, make sure that you have cell service. You want to be able to reach the outside world somehow if there is a problem, and sending up a smoke signal because your phone isn’t working isn’t the best way to go about things. Check in advance to make sure that your phone is serviceable before you go show the property to a prospect. It can save lives!

Keep Your Client’s Stuff Safe

Before walkthroughs, have your client pack away their valuables. You don’t want their great great grandma’s jewelry or their precious laptop stolen. Also, tell them not to leave out anything with their name on it, such as mail, bills, or other paperwork. All jewelry should be removed from the home entirely or hidden well. Easy to pick-pocket items such as headphones, iPods, or keepsakes should also be hidden or removed.

Create an Office Distress Code

With your co-workers, decide on an official distress code. This word or phrase is not one that is commonly used in your industry, but can be worked into any conversation in front of a client without them realizing that you are calling for help. This can allow you to signal to your coworkers that you are in danger without alarming the client that you are standing with. For example, use the phrase “red file”. If you feel you are in danger, call up your office (casually). Tell them that you are with Mr. Smith at his property, and you need them to email you the contents of the red file. This alerts them to where you are, with whom, and that there is a problem.

Create a Safety Excuse

A lot of people have been on a bad date and wanted to get out without alerting or embarrassing their date. So what do they do? They fake a family emergency, and leave. You can use this in your business, too. If you are out with a client or a prospect and feel uncomfortable or unsafe, but not enough to use your code word, a safety excuse removes you from the situation. You can claim you just got an urgent email and need to step outside to call your office, or that you left a file in your car. If you want to imply that you will shortly have company (and therefore not be alone with the person you are alone with), let them know (casually) that another agent with buyers is on the way.

Check Out Potential Dangers When You Arrive

When you arrive to your destination, check out what’s around you before your client shows up. Is there currently any questionable activity in the area? Are you parked in a safe, well lit, and busy location? Can your vehicle be blocked in by another vehicle? Are there other people in the area who could help you if you needed it? Make sure the back door to the building you are in is unlocked so you have another path of exit if you need. Assessing your situation could save you later.

Meet the Neighbors

If you think it will be a long time before a property sells, and that you will be showing it often, go introduce yourself to the neighbors. It works both ways – the neighbor will no longer wonder who you are and why you are going in and out of their neighbor’s house all the time, and you will be at a little more peace knowing that they know and recognize you and your vehicle, and that you have built a little rapport with them in case you ever need assistance.

Carry Less

Don’t have your purse or briefcase on you when you go to show a house. If you need to carry a lot of paperwork, use a plain folder or a padfolio. When you are going to be alone with a client, don’t have anything on your person that you would be devastated to have stolen. Carry only non-valuable business items, and do not keep your wallet in your back pocket, wear a lot of jewelry, or leave your purse or valuables somewhere visible in your car for any passers-by to see. You may even consider leaving your smart-watch in the car while you show a house. The less interesting you look to steal from, the less likely you will be stolen from.

Ways to Save for A Down Payment

Even if you don’t plan to purchase a house for several years yet, you’ve almost certainly thought about how you will save up for a down payment. You must slowly set aside a lot of small amounts of money – investing in stocks simply won’t work here. Before you begin saving for your house, you should know a ballpark of how much you want to save up. Sit down with a mortgage lender or broker who can let you know how much of a mortgage you qualify for – and what percentage of that amount you should aim to save up for use as a down payment.

In today’s lending market, you should expect to make a 20% down payment. This is the average, but you can pay more if you wish – or less if that’s all you can manage. 20% is not a requirement, but the minimum advised payments for the best deals. If you put down less, you will likely be paying a higher interest rate, which can come back to bite you later. Weigh the pros and cons to come up with a number for what you wish to save up for a future down payment, and let that number be your ultimate goal.

The idea of saving up for a down payment can be stressful. The amount looks quite big – and it is. On top of that, it  can take a long time to save up for if you don’t know what you’re doing or how to plan your budget. Of course, you could squirrel away a little money here and there each paycheck, but that won’t do it. You’ll have to get creative – here are our best ideas for saving up for a down payment.

Transfer a Fixed Amount Into a Savings Account Every Month

Of course, we still have to mention it – probably the most basic and most reliable way to gather up money for a down payment on a house is to simply save money. It is also the most convenient way to save, as most big banks will allow you to set up automatic direct deposit into a savings account. As long as you can commit to only using these savings for your down payment and nothing else, you can sit back and watch your money roll in – and all it will take from you is a trip to the bank to set up the savings account.

Skip Family Vacations for Now

When you’re trying to save up for something as financially hefty as a down payment, it doesn’t make sense to drop multiple thousands of dollars on a trip that will only last a few days. Your new house will last forever! Use your money on that. If you save up the money you would have spent vacationing, you can make a huge contribution towards a down payment. To supplement the need to get out of the house, save money by taking “in-town” trips. You will be surprised how many fun things are right up the road from you – no trek to Hawaii involved.

Review Your Expenses

We all know someone who has so many monthly subscriptions (video streaming services, music streaming services, monthly surprise box deliveries, food delivery services…) that they can’t name them all. Don’t be that person! Look over your expenses and see where you can cut back. If possible, try to cut back on more than just monthly subscriptions – can you be more frugal with your water usage to lower your water bill? Can you spend a little less on groceries? Can you buy store-brand for a while, instead of organic superfoods? Can you reduce your twice-monthly water jug delivery to just once a month? Take the money you end up saving by doing this and put it towards your down payment.

Investigate Your High-Interest Rate Debt

Check out the fine print on your credit cards. What is your interest rate? If you have multiple credit cards, make note of which is the highest interest and which is the lowest. Start by paying down your highest interest rate card. When you’ve paid the entire balance, close it, and start working on the next highest interest rate card. Don’t want it to take that long? Transfer your balances to the card with the lowest interest rate, then close the other accounts. Take the money you would have spent on interest and put it in your savings account for your down payment.

Borrow From Relatives

We’ve all heard the jokes about calling your parents for money – but there’s nothing wrong with it if they are willing and able to help you. In fact, it’s incredibly common for parents (or other family members) to help out with a down payment when it comes to buying a first home. Over 50% of first time home buyers as well as home buyers under the age of 30 say that their parents helped them with a down payment. The only thing that is required of you is to include the amount on your loan application. You cannot also take a loan from a family member to use on a down payment – it must be a gift, and the family member must write a letter stating as much.

Borrow From Your Retirement Plan

A lot of retirement plans allow certain penalty-free withdrawals – a common one is for home buyers. Many employer-sponsored 401(K)s or profit sharing plans allow employees to borrow against their own savings to purchase a home. If you don’t know, and your plan is sponsored by your employer, you can ask your HR department or your payroll department to help answer your questions. If your plan is not employee sponsored, you can call an accountant or a financial advisor to help you.

Sell One or Some of Your Investments

Think of it this way – you aren’t getting rid of your precious investments, you’re moving them into another investment vehicle (your new home). This is because you accrue equity in your home as you make payments on your mortgage. As your home value increases, your investment does too. Look at your current investments, and sell off what you can. It may help a lot! Use the money you get from selling and put it towards your down payment.

Get a Second Job

This can be stressful, but is worth it if you have the time. If you are already currently living off of what you make, you can put all of your money from your second job towards your down payment. Just make sure that you really do this. Suddenly having a few extra thousand dollars a month can end with impulsive spending sprees, which detracts from the whole reason you got a second job in the first place. If you don’t have time for a full time job, get a part time one. Even just a few extra payroll hours per week can make a big difference.

Look Into Down Payment Assistance

There are a lot of organizations, government and otherwise, that exist to help people come up with the money for their down payments. Check to see if you qualify for down payment assistance from the Federal Housing Administration, the US Department of Agriculture, the Rural Housing Service, and the Veteran’s Administration. You can also look into local housing authorities to see if there is anything that they can do to help you. Check with your bank, too! Just make sure that you read all of the fine print and that you do your due diligence – don’t just take any amount of money you are offered without asking questions.

Start a Side Hustle

A side gig can act as a “second job” on your terms, where you set the times you work and decide what you want to do. You can walk dogs, referee sports leagues, tutor school children, babysit, pet-sit, mow lawns, do nails out of your home, have a yard sale, or sell off your unwanted items. If you add in just 16 hours per week making $10 per hour, you get an extra $120 a week after taxes to put towards your down payment! In two years, you’ll have an extra $12,400. It adds up fast!

It can be extremely hard to save money for a down payment when your rent keeps going up every year. When the median rent rises 32% in ten years but household incomes don’t increase by much at all, your ability to save money is what takes the bullet. It is estimated that it would take a person under 30 seven years to save for a 10% down payment. But by using these simple tips, you can make it a little easier. Wise money behavior sets you up to make home ownership a blessing instead of a financial burden.

Things Your Mortgage Broker Should Be Doing For You

You may have heard the age-old question – should I work with a mortgage broker? A mortgage broker acts as a middleman between you and potential lenders. Their job is to work on your behalf with several different lenders (banks or standalone lenders) to find the mortgage loan that works best for you and your family as well as your financial situation. A well-established mortgage broker will have a long contact list of possible lenders for you to work with, which makes things easier than you finding and contacting each lender on your own. Mortgage brokers are also licensed and regulated professionals who have been specially trained to do their job.

Here are some things that you can expect from your mortgage broker.

Help to get Pre-Approved

One of the first things you must do in the homebuying process is to get pre-approved. Your mortgage broker should be able to help you do this. A pre-approval is an offer from a lender indicating the type and amount of loan you could qualify for, and it’s based on an evaluation of your financial situation. It is not a promise, and more like a quote. You will have to submit a few pieces of information about yourself, and your broker will tell you what information is needed so that the process is as quick and simple as possible. In the past, getting pre-approved took time, but these days, you can get your results instantly through an online calculator. Your broker will also ask for a letter of pre-approval on your behalf, to act as proof that you were pre-approved for a certain amount.

A Streamlined Application Process

Without a mortgage broker, you would have to send a separate application to each and every mortgage lender you wanted to get a quote from. With a mortgage broker, you will only have to fill out one application – after that, they will do the hard work for you. You won’t have to worry about sifting through multiple piles of paperwork just to see if a certain lender is the right fit for your financial situation. In fact, while the mortgage application process is notorious for being long and tedious, having a mortgage broker help you to fill out the application will make things faster and easier. If you aren’t sure what to list in a certain area of the application, your broker will help give you some ideas.

Assistance for Special Cases

Does your financial situation mean that you will need some extra help getting a mortgage loan? If you have bad credit, work for yourself, are a first time home buyer, or a homebuyer with a previous bankruptcy or foreclosure, that’s you. Working with a mortgage broker will make getting a house much easier to accomplish. Most mortgage brokers are trained to work with folks who need some extra assistance and know which mortgage lenders will work with them and offer them good deals. There are also mortgage products on the market specifically for people who are in unique situations, and your mortgage broker will know where to find the product that you need. Buying a home doesn’t have to be a pipe dream when you have a knowledgeable and experienced mortgage broker on your side.

General Process Simplification

There are a lot of factors involved with getting a mortgage, and your mortgage broker is knowledgeable enough to help explain things when they get confusing. If you have questions, ask them! No matter how many inquiries you can come up with, you have the right to be fully knowledgeable regarding what is likely to be the biggest purchase of your life. Your broker spent a long time becoming a mortgage expert, so use their knowledge to your benefit and make sure that you ask them anything you can. To make sure that you are signing up to work with a broker who has the knowledge you will certainly be seeking, ask them about their experience in your initial interview with them. You want to work with a mortgage broker with at least three years of experience, if not more.

Lender Comparisons

If one lender is offering more money but a higher interest rate, should you take that loan instead of the smaller loan with a better interest rate? Your mortgage broker can help you figure this out. They have a lot of experience matching financial situations to mortgage loan products. If the options presented to you seem equally beneficial, you can be sure that you’ll have help figuring out which one is the best for you and your financial situation. You can also be sure that your application will be checked against many more lending institutions than if you were doing the applying on your own behalf – your mortgage broker likely has a large contact list of many different mortgage companies who can all offer different rates, which they will then compare and offer you a shortlist of your best options. All the hard work is done for you when you have a mortgage broker!

Negotiations on Your Behalf

Don’t feel comfortable telling your mortgage lender that you want a better deal? Your mortgage broker can do this for you. Save yourself the time of trying to fight for a better deal – when your mortgage broker is on your side, you’ll know that you are getting the best offer because your broker fought hard for it. Of course, it’s good to ask your broker to do this instead of just assuming that they are willing to do so and will automatically do it – but there should be no issue and your broker should be happy to help with rate negotiations. You can tell your broker your absolute maximum you are able or willing to accept as a mortgage rate and ask them to fight for that number or better. They must know your expectations in order to know what to negotiate for, so be sure you let them know when you ask them to negotiate for you in the first place.

Specialties – Maybe!

Some mortgage brokers have specialties – for example, one broker may be highly experienced in working with people who have bad credit, and another broker may have a lot of experience helping first time buyers. It depends on the broker you are talking to. To find a broker who specializes in your specific situation, ask around. You may also have some success asking any other mortgage professional you know if they have any connections with mortgage brokers who could help you. While you may enjoy working with a broker that specializes in your specific financial situation, your arrangement with a regular broker with no specialties is likely to be just as rewarding and enjoyable. You will just have a slightly quicker time if you go with someone who has experienced your type of customer a hundred times!

Guidance from Beginning to End

Which comes first – putting in an offer on a house you like or sending in your mortgage loan application to the lender you chose? What about touring a house or getting pre-approved for a mortgage loan? Not everyone knows the proper order of the steps you must take to get a new home, but your mortgage broker does. From beginning to end, they are there to help you and guide you to what your next steps should reasonably be. The mortgage process is ever so slightly different for everyone, but there is always a general framework that should be followed as far as specific “steps” goes. Your broker will be able to give you a run-down of what to expect and should frequently let you know what your next steps are and how you will achieve them.

Someone on Your Side

It can seem like you are “against” the seller, who is trying to get more money from you, as well as the lender, who is trying to charge you a higher interest rate than you’d like. However, your mortgage broker is on your side and no one else’s. Mortgage brokers cannot be rewarded by any specific bank or lender to push their products, and they are not paid based on the amount of a loan you get approved for. The only thing they want is to get you in your new home expeditiously.

Help Getting a Rate Lock

Once you commit to a specific lender, you can ask your mortgage broker for help getting a rate lock. A rate lock ensures that you will receive the same interest rate you are quoted for a set timeframe, regardless if rates go up or down. Typically these rate locks last for 30 to 60 days. Your mortgage broker can also help you obtain a float down clause – this ensures that if interest rates fall during your rate lock period, your rate will fall to match. You can also have your broker get a loan commitment letter from your lender, which is your rate lock agreement in formal writing. It should have the lender’s name, the interest rate and points, the date the rate was locked, and when the lock expires.

Why It’s Better to Buy Than Rent

To rent, or to buy? This is the question that follows many adults in this day and age, and it’s a good one to ask. Is renting cheaper? Does buying call for too many pre-requisites and responsibilities to sign up for? Does renting rob a person of the joy of having a home to call their own? Is a mortgage worth it? Should you rent or buy your next home? It’s a legitimate question that is important to ask, and you should educate yourself on which route is the best. We know the answer, and if you continue with this article, you will too! 
 
Point #1:
Renters are at the mercy of their landlords. This is simply fact! A renter cannot make updates or changes to the home, and if the appliances or the building is outdated, there is not much they can do about it. Large remodeling projects are forbidden, and the local economy’s influence on their landlord plays the biggest role in their monthly housing payments – not a country wide market rate that is the same for everyone. Therefore, someone in a big city could be paying more than 10 times the amount of a person who lives in the country – for the same size rental property – simply because the landlord decided that it should be so. A landlord can also decide at nearly any time that their tenant is going to be subject to a rent hike – and there isn’t much the tenant can do about it but move into a different rental property. 
 
Point #2:
The Urban Institute has recently found that renters deal with greater money uncertainties than homeowners. Typically, a homeowner will have a fixed rate mortgage, meaning that their housing costs are the same almost every single month, and therefore quite simple to forecast. As we mentioned previously, renters are at the financial mercy of their landlords, who can raise the rent at virtually any time. It has been found that more renters than owners lack confidence in being able to save a mere $400 to cover an emergency expense – over 10% more. It has also been found that renters are more likely than home owners to have problems paying for housing, food, medical needs, or utilities. Freddie Mac reveals that two out of three renters found it difficult and stressful to pay their monthly bills over the last two years. With the way the rental market changes and fluctuates, it is no surprise that homeowners typically have a much easier time forecasting their finances – they have a set rate that never changes! 
 
Point #3:
Buying can help you build equity. Putting money down to pay for your home rather than paying rent is the same as investing money in an asset. The asset is what builds you equity (the difference between the value of the home and the value of the mortgage). As you pay your mortgage, you increase your equity in the property. If you are paying rent, you don’t build equity with every payment. Really, you don’t build anything. There is absolutely no negligible reward or achievement gained from paying rent – even if it is dutifully paid in full and on time every single month. 
 
Point #4: 
Eventually, you don’t have to make payments anymore. When you pay off your house, that’s it – you no longer have monthly housing costs to pay. When that happens, your overall monthly bill total is going to plummet. When you rent… Well, you never stop paying rent for the entire time you live at the rental property. There is never a “finish line” when you rent as there is when you buy. Eventually, buying a home will save you money. There is no question about it. Another thing to think about that is in this same vein: When you put down a down payment on a home, you pay only a portion of the home’s value but still get to access 100% of the home. When you rent, you pay the full amount every month for access to the home, and almost always have to offer multiple fees up front – the first month’s rent, a deposit, a cleaning fee, a pet deposit, the last month’s rent, application fees, processing fees…. and not a penny of it benefits the renter. It is one hundred percent profit for the landlord. /
 
Point #5:
Homeowners are allowed to deduct mortgage interest and property taxes when they file their tax returns every year. Yes, we’re serious! Renters get no tax deductions. For example, on a $300,000 home, owners typically receive up to (the equivalent of) $335 per month in tax deductions. To apply this to an average monthly mortgage cost of $1,731, you would be left with a total monthly mortgage cost of $1,396. That’s a huge difference, can make a big dent in your monthly expenses, and it is certainly a perk that renters simply do not have access to! This significant savings from tax benefits can often make owning your home much cheaper than renting – especially when you pair your savings from tax deductions with your savings from having your monthly mortgage cost remain the same every month instead of being at the whim of local market rates. 
 
Point #6:
The entire portion of a renter’s monthly payment goes to the landlord – always, and no matter who you rent from. There is no benefit to the renter at all in this situation, and absolutely zero return on the renter’s sizeable investment in monthly rent costs. When a homeowner makes their mortgage payment every month, however, a large portion of that payment is paying down the loan’s principal each month, giving the owner more equity in their home – and therefore, a return on their investment. The loan pay-down each month is required as part of the mortgage agreement, of course, and there is no getting around it – but instead of that money going towards another person, it goes towards an investment by the owner into their own home – almost like forced savings that benefit the owner. In the end, the financial situation of the homeowner is better off than the financial situation of the renter, simply because renting a home is profitable for the landlord, and buying a home is profitable for the home buyer. 
 
Point #7:
Stability is something that most adults crave – even subconsciously. When you own your property, it belongs to you, outright, until you choose to sell it. The only way you can legally be forced to leave a home that you own is if you stop making payments on the mortgage and the house goes into foreclosure. If you have found the perfect home in the perfect neighborhood, this can be great news. However, if you are a renter, you could be subject to being asked to leave the property within 30 days, at nearly any time – whether the reason is fair or not. It is not uncommon at all for landlords to sell rental properties to other landlords, and for the new landlord to then immediately evict the tenant or tenants so that they can totally remodel the building(s) and then start over with new tenants of their choosing. You simply have less stability when renting, and more security when buying. This can mean keeping your kids in the same school district, ensuring that your commute remains the same, and enabling you to not have to travel to access your local grocery stores, libraries, gyms, or friends. Some people would simply state that they don’t mind occasional changes of pace – but wouldn’t you rather know that your living situation is one hundred percent up to you, and not the whims of your landlord? 
 
We’ve seen here that it’s a simple answer: Buying a home is a much better financial prospect than renting one. But what can you do if you can’t afford the large down payment that is required when buying a home – or if your credit is not good enough to pass the loan application overview by the underwriter? Well, the simple answer is that help is out there. There are programs in place (both by lenders and the federal government) meant to help prospective home buyers by forgiving percentages of their down payments, their low credit scores, or their self-employment. There are lenders that will custom design a mortgage for their prospective home buyers with trickier circumstances, and government designed loan programs that are tailor made for those with issues that otherwise would stop the mortgage process in it’s tracks. 
 
No matter what situation you are in or how troublesome your finances have become, you must always work towards buying a house – even if you can’t buy one right now. Work on your credit, pay off your debt, or move to a business industry with more promising work – whatever you have to do to start preparing your financial health for buying a home. Like we discussed above – it’s surely worth it!

What Is a Reverse Mortgage and How Does It Work?

Sometimes, those in retirement can become stressed about where their money is going to come from. When a person is looking for extra income during the retirement phase of life, they may consider a reverse mortgage. This can be a great way for seniors and retirees to solve that problem quickly! 
We all know about regular mortgages – you find the house of your dreams with your real estate agent, apply for the loan to buy it, and, if accepted, pay back the loan over, typically, 15 or 30 years plus interest. But what is a reverse mortgage? Don’t take it literally – a reverse mortgage is not where you give the loan for someone else to buy a home! When someone takes out a reverse mortgage, the money comes from the equity built up on the home so far. You are basically borrowing back money you’ve paid into your original mortgage loan. 
 
What is a reverse mortgage? 
The official definition of a reverse mortgage is  a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The withdrawn equity is turned into cash and handed to the home owner, a line of credit for the homeowner to use at their will, or a scheduled income stream (usually monthly) – typically the homeowner will live off of these funds during retirement in place of a retirement fund. The loans are typically promoted to older homeowners and usually do not require monthly mortgage payments, but borrowers are still responsible for property taxes and homeowner’s insurance. 
 
Reverse mortgages are meant to allow elderly people to access their long-time home’s equity that they have built up over the life of their loan so far. The home is used as collateral. The payments on the loan are deferred until they pass, sell, or move out of the home – and since there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance every month. The borrower is typically not required to repay any additional loan balance in excess of the appraised value of the home. In Canada, the loan balance cannot exceed the fair market value of the home by law. 
 
You can use the money from a reverse mortgage however you like, but typically, people use them for debt consolidation, living expenses after retirement, home improvements, helping children with college, or buying another home that will better meet your needs as you age. 
 
What are the benefits of a reverse mortgage?
Your heirs won’t have to repay the loan! In your absence, your heirs can sell the home to cover the debt. They also have the option of paying off the debt to keep the home. Reverse mortgage incomes are often tax free, as well. This is another big plus. You are not required to sell your home, down size, or move to a different part of town. 
The loan gives you a lot of financial freedom. You can use the money from your reverse mortgage however you want to. There are no rules for how it must be spent or when it is allowed to be spent. 
You remain the owner of your home. A common misconception of reverse mortgages is that the lender will take ownership of your home – this is not true. You maintain ownership of your home as long as you comply with the terms of your loan and pay your property taxes and homeowner’s insurance. 
You are protected, even if the housing market declines! Your reverse mortgage is insured by the government, which means ultra high levels of security. If your loan ever surpasses the value of your home, government insurance will cover the difference, meaning the loan will be paid in full using only the money that your home sold for, and nothing additional.
 
Are there any downsides to a reverse mortgage? 
Perhaps, but they’re largely conditional. If you ever want to leave your home, you must pay up on your reverse mortgage loan – in full. Sometimes, due to circumstances out of the homeowner’s control, the amount they are offered for a reverse mortgage loan is less than what they wished for or anticipated. The interest on reverse mortgage loans can sometimes be a little higher than the interest on a regular mortgage loan, but this largely depends on the state of the housing market at the time the homeowner inquires about the reverse mortgage. It can also seem complicated if one is not well educated in how a reverse mortgage works. With a traditional mortgage, you borrow money up front and repay the loan over time. With a reverse mortgage, you accumulate the loan over time and repayment is only due when you no longer live in the home. There is also no tricking your lender in a reverse mortgage situation – if you are found to have your primary residence in a home other than the one you took out a reverse mortgage on, you may be subject to foreclosure. Sometimes, your loan terms may indicate that you can set up a primary residence elsewhere for short periods of time (think a long vacation, or for those who “winter” in warmer places), but this can be uncommon if not directly requested by the homeowner during the reverse mortgage loan process. 
 
What are the different kinds of reverse mortgages? 
There are two different kinds of reverse mortgages – fixed rate and adjustable rate mortgages. Sounds familiar? It should! That’s how regular mortgages work. Things are almost the same between the two types of mortgages. A fixed rate reverse mortgage consists of a one-time, lump sum cash payment to the home owner. But adjustable rate mortgages get a little bit more complicated. There are five options for adjustable rate reverse mortgage. They include tenure, term, line of credit, modified tenure, and modified term. 
 
Tenure reserve mortgages set monthly payments to the homeowner, as long as they or their eligible spouse remain in the home. Term reverse mortgages set monthly payments to the homeowner for a fixed period. Line of credit reverse mortgages offer the homeowner unspecified payments when the homeowner needs them, until they have exhausted their max funds. Modified tenure reverse mortgages offer the homeowner a line of credit and set monthly payments for as long as the homeowner and their eligible spouse live in the home. Modified term reverse mortgages offer the homeowner a line of credit and set monthly payments for a fixed period of the homeowner’s qchoosing. 
 
Who benefits from a reverse mortgage?
To apply for a reverse mortgage, you must be 62 years old or older. If you have a spouse, they must be named on the loan even if he or she is not a co-borrower. You both must live in the home as a primary residence. You may not have any delinquent federal debts. You must own your home outright, or have a considerable amount of equity in the home. You must attend a mandatory counseling session with a home equity conversion mortgage counselor that is approved by the Department of Housing and Urban Development. Your home must meet all FHA property standards and flood requirements. You must also be willing to agree to continue paying all property taxes, homeowners insurance, and other household maintenance fees, as long as you or your eligible spouse lives in the home. 
 
How does one get a reverse mortgage?
There are many places that one could get a reverse mortgage, but many major international banks, such as Wells Fargo or Chase, do not offer them. You will speak with a lender and they will calculate the combination of many factors, such as what amount of equity is already built up in your home, your age and your spouse’s age, the age of your property, and your current income to decide how much they can lend to you. You go through a closing type process, similar to when you take out a regular mortgage, and then receive your lump sum of cash, begin receiving your scheduled payments, or gain access to your line of credit. 
 
What else should I know about reverse mortgages? 
When you are in the process of getting a reverse mortgage, your lender will check your credit history, verify your monthly income versus your monthly financial obligations, and also order an appraisal on your home. It is highly recommended to wait until at least retirement to obtain a reverse mortgage, lest you run out of money too early into retirement. Nearly all reverse mortgages are originally issued as home equity conversion mortgages by the Federal Housing Administration – which comes with strict borrowing guidelines and, usually, a loan limit. There are closing costs, just like with a regular mortgage, and they do tend to be a little costlier than with regular mortgages. Receiving income from a reverse mortgage might affect your eligibility for various other retirement benefits, so be sure that you make a mention of your reverse mortgage if you are interested in other retirement benefits.

Important Questions to Ask Your Mortgage Professional

Mortgages are complicated, and it’s important that all of your questions are answered in a way that’s clear and concise. Your mortgage lender or broker is there for you when you have a question, but what happens when you don’t know what to ask? We’ve got you covered! Here are the most important questions you can possibly ask your mortgage professional.
How Does a Mortgage Work?
This sounds like an obvious question – but do you really know? And if you think you know, are you sure you’re right? It’s important that you don’t just know the general concept of how a mortgage works, but also the smaller details of it, such as what documents you can expect to have to offer and what APR is.
What Types of Loans Do I Qualify For, and Which is Right For Me?
You may qualify for more than one type of loan, and you need to know all the details of each one – even the most minute fine print! You need to know whether the rates of each are fixed or adjustable, as well as the interest rate, term lengths, and more for each loan type. You may qualify for a special type of loan, such as one that is government backed or one that is specially designed for those with credit troubles or low down payment savings.
What Does My Monthly Mortgage Payment Include?
There’s more to it than just the repayment of principal and interest! If you put down less than 20% on your down payment, you are required to pay what is called “Private Mortgage Insurance”. What you pay monthly will also differ if you have an escrow account for your taxes and insurance or not. At minimum, your monthly payment will include principal and interest, but there are other factors you must consider. Your mortgage professional will be able to lay everything out for you.
Is Down Payment Assistance Available?
If you want to avoid being forced to pay Private Mortgage Insurance, but weren’t able to gather up 20% to put down, you can ask about down payment assistance. Some lenders accept down payment grants, and if you need them, it’s worth asking about. If you don’t know who to contact about down payment assistance, your mortgage professionals should be able to guide you towards where you can find the grants.
What is the Loan Estimate?
You are required to receive a document from your potential mortgage lender within three business days of your completed loan application submission that states a breakdown of the costs associated with your loan, including closing costs. This breakdown is just an estimate, but it will give you a better idea of what to expect. Don’t be intimidated about asking the lender to clarify certain expected charges, or to further break down your loan estimate.
Do You Offer Rate Locks?
Rate locks can be a great thing during the mortgage loan process. Rate locks allow you to “freeze” or “lock in” your interest rate for a period of time before closing, so you can protect yourself from market fluctuations. Rate locks are commonly offered, but there are only certain times that you are allowed to use them. Some lenders allow rates to be locked for up to 90 days, and some only allow rates to be locked for up to 30 days. Also consider that most lenders will rate match – if, after the rate lock period is over, market rate on interest has gone down, so too will your rate. If the market rate on interest has risen, your rate will not also rise.
Do You Handle Underwriting In-House?
When you have sent in all of your loan application information and relevant documents, the underwriter will verify that information and make sure you qualify for the loan you are asking for. Sometimes, mortgage lenders work in the same office as their underwriter. This is not a requirement, but it can make the loan process proceed faster if everything is handled in house. You can also ask what to expect during the underwriting process, whether the underwriting is handled in house or out of house.
What is Your Loan Processing Time?
Some lenders have a goal time that they aim to process loans in. Others will tell you that it takes as long as it takes. Either way, it’s worth asking! Depending on which loan type you need and how much assistance you’ve taken out, as well as how ready you were to take out a loan, your processing time could take longer or not long at all. Once your mortgage professionals have the information they need, it’s fair to ask how long they expect the loan to take to process. From the mortgage lender’s point of view, they want to process your loan as quickly as possible, enabling them to be able to move onto helping the next borrower – so that is in your favor!
What Happens if my Appraisal Comes in Low?
You should know what to expect if your appraisal comes in low. A low appraisal can affect how much a mortgage company is willing to loan you and how much you are going to have to pay all by yourself, on top of your down payment. For example, if the home you want is being sold for $100,000 but the appraisal only totaled $75,000 it is likely that your mortgage lender is only going to loan you the $75,000 and the other $25,000 is on you to come up with. In this case, you can usually renegotiate with the seller to try and close the cap between selling price and appraisal price.
Will You Sell My Loan?
We bet you didn’t know that this was possible. Sometimes nowadays, it’s almost expected. The answer to this is likely yes, and it may not be a bad thing for you. In the old days, you would stick with the same lender over the life of your loan. Now, your original lender may sell your loan to a major mortgage investor. However, this doesn’t mean that your connection to your original lender has been severed. Knowing your loan’s new manager is important, though, because if you ever need payment delay or assistance, you’ll have to call them instead.
What Do I Need to Prepare for Closing Time?
This is important – You don’t want to mess things up during closing time when you’re almost home-free, so make sure that you are perfectly clear on what to expect from and what to have prepared for closing time. Sometimes you are only required to bring your cashier’s check for closing costs and your government issued identification, but other times there are certain miscellaneous things you must have with you.
Will You Communicate With Me After Closing?
Another important question is how often you can expect to communicate with your mortgage lender after closing time. They should still be willing to check in with you and make sure you’re doing well financially after you obtain your mortgage and move into your new home – typically two or three times per year over the life of your loan. Communication with your lender after closing allows you to get your questions answered and to make sure your current mortgage is still beneficial to your long term financial goals and dreams.
Are You Doing A Hard or Soft Credit Check?
The short of it is that a “soft” credit check does not show up on your credit history, but a “hard” credit check will. You have the right to know when a hard credit check is going to be performed on you, and it must happen when you are getting a mortgage. Lenders need to do a hard credit check to give a more firm interest rate quote. If you’re shopping with more than one lender, try to time everything so that these hard credit checks happen all around the same time – within about a week or so total – so that the impact on your credit score is smaller.
The amount of these questions may seem staggering, but you have the right to answers – especially when you’re signing up for the biggest financial agreement of your entire life. Don’t worry, your mortgage professionals are happy to answer every question you have. That’s part of their jobs! It is your responsibility to make sure you know all of the details as far as your mortgage goes – try to become as educated as the mortgage professionals themselves! It can save you a lot of pain and stress later, because you are now stuck in an issue that could have been avoided if you had just asked for some clarification before closing time. If you were stumped on what is appropriate to ask your mortgage professionals, hopefully this condensed list helps, but remember that this is not a complete list of what you should ask. Do your research to make sure there is nothing else you need an explanation for!

Picking the Right Mortgage – It’s Easier Than You Think

Picking the right mortgage is a big deal. After all, you’ll have it for the next 15 or 30 years. You want to make sure you get this decision right. If this is not your first mortgage, you may have some of an idea what to expect and of how to determine a mortgage based on your needs and requirements. If this is your first mortgage, have no fear! Things may seem quite complicated and you might not know where to go or what to choose. Don’t worry – Today we’ll be discussing the three most important factors of deciding if a certain mortgage is right for you. You will leave this article feeling much more confident in your decisions. 
 
What To Look For In a Mortgage
Do you need an assistance program such as a first time home buyer’s program or a program for those with a low down payment or low credit? Some lenders and government headed finance agencies offer these assistance programs. If you need one, make sure that you get a mortgage that offers it. Government loans generally offer more relaxed qualification requirements anyway, so if you just need a little boost, you may direct your search in that direction. 
 
Look for low interest rates, of course. You can use online rate comparison tools to see current interest rates from multiple different lenders. Compare annual percentage rates, or APR, as well. This will give you a more complete picture of what you’ll pay over the loan term. Also compare application fees, appraisal fees, title and loan origination fees, and closing costs. Don’t sign anything before each of those numbers has been explained to you and you are comfortable with each of them – there are tons of details involved with a  mortgage and one missed could mean thousands more dollars paid into your loan. Ask for a lot of clarification! 
 
Look for a mortgage with an agreeable term length. A short term mortgage will cost you less over time, but more up front and more per month. A long term mortgage will cost you more over time but less per month, and likely less up front. Which is best for you depends completely on your financial situation, but you must do your research on both options. Your lender can compare term lengths with you to show you how much, estimated, you would pay per month with each choice. When choosing the length of your term, also consider if you plan on moving in the next ten years as well as if you want to have the same payment for a longer period of time.  
 
Another thing you should look for is a mortgage with your preference in rates – fixed or variable. Fixed rates stay the same for the entire term. Variable rates change on an agreed upon schedule, and can go up or down. When you decide which type of rate is best for you, remember that the rise and fall of interest rates is hard to predict, and consider how much of an increase in mortgage payments you could afford if interest rates rise. If the idea of your interest rates skyrocketing stresses you out, perhaps consider a fixed rate mortgage. This type of mortgage will be better for you if you want to know in advance what your monthly payment will be, or if you expect interest rates to rise over the term of your mortgage. Whichever rate type you decide is best for you, make sure your loan type offers it. 
 
What Type of Mortgage Loan is Best for Me
The first thing you need to do here is assess your situation. What is your credit score and history? This is arguably one of the most important numbers involved when getting a mortgage. Consider your financial well being and try to forecast your financial future. Also consider your life plans – will you stay in this house for the rest of your life, or do you want to flip it and re-sell? What loan types do you qualify for? What interest rate types do you prefer? Once you have the answer to all of these questions, you will have an easier time determining which type of mortgage loan is best for your situation. If you are stuck on any of the questions above, your broker or lender should be able to help you out. 
 
Mortgages are like finger prints. Every one is unique. Just because a certain type of mortgage loan worked for your friends or your parents, it may not work for you – at all. Your financial situation is different than theirs, and requires different amenities from a mortgage loan program. A loan program one person uses may even be completely unavailable to another person. Your lending advisor will help you make the right call. 
 
Consider these factors when you are speaking with your lending advisor: Which loan has the lowest monthly payment? Which option requires the least amount of money up front, and do the lower payments now equal larger payments later? What option will cost me less over time? How does my income affect the loan programs for which I am eligible?
 
There are no bad mortgage loans, only mortgage loans that aren’t right for some people. You and your lender will work out which loan program is your best choice to help you reach your goal of owning a home affordably and comfortably.
 
How to Choose a Mortgage Lender
Request quotes from multiple lenders – not just one or two. This costs you nothing and doesn’t hurt your credit score. Pay attention to more than just the interest rate. Look at the annual percentage rate, origination fees, and other fees they may require. Don’t hesitate to ask a lender to “price match” another lender or to ask them about any fees that seem duplicitous or confusing. You have the right to negotiate and to ask questions. Be sure you are clear and comfortable with all the terms you must agree to.
 
Look for a mortgage lender who offers free pre-qualification. A pre-approval letter will assist you in staying on budget and tells sellers that you can get a loan and were responsible enough to take the extra step. Pre-qualification will not ding your credit score and requires less information given on your part to determine your pre-approval amount than if you went through with the mortgage. Once you get your pre-approval letter with your loan estimate, you can then agree to move forward with this specific lender or not – so getting pre-approved is not a promise that you will work with a certain lender. Any lender you go with should offer pre-qualification. 
 
Never immediately sign with the first lender you come into contact with. You must always compare your options. Sure, the first lender you meet given may sound fantastic, but there may be an even better one around the corner. You can ask family and friends for recommendations, and then take a look at online reviews that can help you compare customer experiences. Besides getting a good rate, you want to choose a lender that has great customer service. You want a lender who is prompt to respond, friendly and educated, willing to assist, and honest.
 
Use the two qualifications of “great rates” and “stellar customer service” to make a short list of mortgage lenders for you to choose from. Get pre-approved with all of them – it’s free and will give you a better picture of what working with each lender will be like. After that, make your decision of which lender you will go with. Highly trained and experienced lenders will be able to help you get great rates and choose the best financing options. They will be passionate about what they do and you should feel comfortable asking them for clarification on anything that happens during the loan process that confuses you. 
 
Another thing you should do is ask each lender for their specific experience with the type of loan you are looking for. Your lender should have a lot of experience with situations similar to yours. It pays to ask each of your potential lenders this question as it is another way to let you know if the lender you are in contact with is wrong for you. You’ll be working closely with them, so you want them to know what you need. 
 
Getting a mortgage loan is a lot of work and can be confusing, especially for first time buyers. One thing a buyer can do to help themselves when getting a mortgage is to make sure they understand the options and features of each lender available to you as well as each program they offer their clients. Your mortgage professional will also be able to assist you in choosing which loan style best fits your needs. Choosing what type of mortgage is best for you can be easy and fun, especially if you know what to expect.

Getting an Unconventional Mortgage – How to Make Your Situation Work

Getting a mortgage is already hard, but when you add low credit, self employment, no income documentation, or no down payment in hand, it gets harder. Can the house of your dreams ever become a reality? If you do things correctly, then yes, it certainly can. There are steps you can take no matter your financial situation or what other hardship has befallen you. Sometimes there are mortgage programs designed specifically for people with your issue, so that you and others like you can get keys in their hand to their new home just like anyone else. Lenders issued $34 billion of unconventional mortgage loans in the first three quarters of 2018, so it is absolutely possible to do.
 
Let’s discuss the different ways you can bypass obstacles in your financial or employment situation to getting the best mortgage for you.
 
Low Credit or No Credit
Sometimes life gets in the way and money is tight. It can happen to anyone. A credit score between 600 and 700 will typically get you a traditional loan with little to no issues, and likely with a “big name” lender. If you have paid all your bills on time, kept your debt to a reasonable limit, and had no major bankruptcies, you should have a decent credit score. Anything less, and you’ll have to get creative with where you get your mortgage loan! There are companies that work exclusively with people who have low or no credit. If you’ve had a bankruptcy in the last few years, you might need to contact a private mortgage lender, as well. A mortgage broker can put you in touch with these companies and lenders. 
 
You may also be able to offset the damage done by low or no credit by being able to offer a higher down payment than you otherwise would. Typically you can get a mortgage loan with only around a 5% down payment, but in this case, aim for closer to 20-25% down payment. It is a much larger amount to save for that might take longer, but it can be well worth the trouble. It gives you more leverage when it comes to negotiating a mortgage rate. 
 
However, be prepared to pay more in fees. Lenders can charge up to 1% of the entire loan amount for processing an application for a loan with bad credit. You might pay more in mortgage rates, as well. If you want to access a lower mortgage rate by renewing or refinancing in the future, be sure to pay all of your mortgage payments on time and to do what you can to boost your credit score. 
 
No Pay Stubs or Proof of Income 
It can be tough to get a loan without proof of your income or employment. Lenders do need proof that you can repay them, after all! Your loan officer might request pay stubs, W-2 forms, bank statements, or tax returns to verify that you have a steady income.
 
This sounds par-for-the-course, but it might not work for you. Self employed people and those who live off of commission or tips may not have consistent income that is easy to prove. Even if you earn enough to repay your loan, if you can’t prove that, it can be hard to get one. 
 
However, you’re in luck. There are ways around this. In rare cases, you may be able to get a “No Documentation” Mortgage. These are not often given, but can be found. In this case, your loan is based on credit ratings, liquid assets, and other assets that can be used as collateral in case of default. If this doesn’t work out, you can consider a Stated Income Loan. This allows an applicant to state how much they make without proof as long as they can also offer up excellent credit of at least 720 and liquid assets on hand that total all living expenses plus the cost of the mortgage for at least six months. 
 
That doesn’t work either? Well, you can also go the route of a co-signer. In some cases, this allows unqualified buyers to secure the funds for a home. The co-sign documentation can take the place of traditional documentation. 
 
No Down Payment
Now there are other avenues for someone with no down payment to take. The alternative to the extremely rare zero down mortgage loan is called a flex-down mortgage loan. That means you’re able to use a line of credit or a personal loan towards your down payment. Not every lender offers this, but you can find it. You must also have a good credit score to qualify for this. 
 
If you have family that is willing to assist you with the down payment, you can cover the down payment on your home with that gift from them. There is a specific process when you do this, though, so be sure to ask your broker or lender. 
 
If neither of these options work for you, there are other things out there that will assist you in getting a home with low or no down payments. Take on private mortgage insurance – typically you’ll be required to do this without a 20% down payment, but having it will set your lenders a little more at ease. You can also borrow against your life insurance policy for your down payment. Other financial avenues to consider include pensions or other retirement accounts. 
 
Self Employment / Freelancer
Being self employed comes with a lot of perks, but ease in getting a mortgage loan is certainly not one of them. Getting a mortgage as a self employed person can be challenging, but is not impossible. Unfortunately, as a self employed person, you present a higher risk to lenders. Your best bet is to offset this risk with other positive assets and attributes of your finances. 
 
Like those with no proof of income or no pay stubs, letters from clients may help you here. You may also qualify for a newer mortgage program called an “alternate documentation loan”, or you may qualify for a “bank statement” loan. There is a difference! With an alternate documentation loan, the income is still verified, but in different ways than normal. You may, for example, be required to show business bank statements instead of personal bank statements. A bank statement loan is a little more self explanatory. 
 
When self employed, the interest rate you pay on a mortgage may be a little higher. Also, the process will be the same (get a rate quote, fill out an application, sign paperwork, and produce documents on demand), but you may be required to offer a little more in the way of paperwork signatures and documentation. Most lenders ask for a minimum two year record of income/earnings. If you can offer this, you’re on your way to being a self employed home owner. 
 
Other small things you can do to offset your risk to your lender:  Keep a good credit score, keep your taxes up to date, and pay down your business debt. 
 
Student Loans
Did you know that whether or not you have student loans can impact your ability to get a mortgage? It’s true. Think of it from the lender’s point of view – can most people take on two huge amounts of debt at once? Probably not easily! There are other factors besides your front to back end ratios that are important when seeking a loan while also carrying student loans. The size of your down payment makes a big difference. If you can save a higher down payment, your student loans are less likely to affect your ability to get a mortgage. How much money you make is also another important factor. To your benefit, if you have student loans, you likely have a degree. If you have a degree, you qualify for higher paying jobs. How long you’ve had that job plays a factor, as well. Which leads us to… 
 
A New Job
If you have a brand new job, or one you’ve been at for less than six months, you may have a few more obstacles than most when it comes to obtaining a mortgage loan. Unfortunately, when lenders run your credit history, they sometimes won’t accept your information unless you have at least two years of employment history with the same employer. You may be able to bypass this if you have spent at least two years in the same industry, if not with the same employer. If you’ve just graduated, you may not be able to buy a home until you’ve had a job for a few years. There are other ways around this obstacle, though! If your job switches industries from a less than stable field to a more stable field, and you do not have a history of job hopping, you may be able to appeal to your underwriter. 
 
No matter what obstacle has been placed in front of you, there is a way around it and a path to home ownership and mortgage loan success! 

How to Keep Your Closing Costs Low

As mortgage rates rise, so too do closing costs. Also against the home purchasing public is that new loan regulations and financial safeguards have caused bank costs to rise when they fund a mortgage loan, and the banks have understandably passed those costs on to the consumers to cover. In fact, mortgage closing costs rose 1.6% last year compared to what they were the year prior, and on average, home buyers paid $4,876 for closing costs. It can seem like there are a million fees you are responsible for! Besides, you did just save up a ton of money for a down payment. Now you have to worry about higher closing costs than you would have been asked to pay ten years ago!  
 
But did you know that you can take precautions to keep your closing costs low? It’s true. There are ways to limit what you are charged during closing time, and if you want to have the lowest closing costs available to you, regardless of the type of mortgage you get, you can follow this list below. You can get a great closing cost rate too! 
 
Before we get into what you can do to lower your closing costs, lets discuss what they are and how they work. All mortgage loans require that someone pay for the closing costs. Sometimes you’ll get lucky and the seller of your new home will pay them. Every now and then you can find a lender who will cover them, in a zero closing cost mortgage, but this is even more rare. 
 
There are two general types of closing costs. First, you have mortgage lender closing costs, which may include origination fees, discount points, underwriting fees, document preparation fees, title fees, attorney fees, prorated loan interest, lender fees, application fees, assumption fees, pre-paid interest, or title search fees. You may also pay a mortgage insurance application fee if your down payment is less than 20% of your loan total amount, as well as some upfront mortgage insurance costs in the same case.
 
The other type of closing costs are third party closing costs. These are paid to companies other than your lender, and they include appraisal costs, credit report fees, tax service fees, property taxes, annual assessments to your HOA (if any), home inspections, flood certifications, escrow fees, and title insurance. 
 
Lenders are required by law to provide you with a list of closing costs you are responsible for paying within three days of receiving your application for a mortgage loan. This list will be only an estimate of what you’ll pay, but it will give you a better idea of what to expect. 
 
Now that we’ve gone over what closing costs are and what they consist of, lets talk about how to keep them low when you buy your home! 
 
Negotiate with the Seller
This one can be tricky. There’s always room to negotiate when you buy a home, in many ways. You can negotiate the price of the home, or what the seller will provide or do for you if you buy. But you can also negotiate that the seller cover all closing costs if you buy, or lower the cost of the home to cover the closing costs you’ll have to pay. Be careful if you choose to go this route. If another potential buyer offers the same amount as you do, but does not ask that the seller cover closing costs, they’ll be the ones the seller strikes a deal with! 
 
A seller will also be more likely to agree to this type of negotiation if you have presented him or her with at least the asking price of the house as an offer. To keep things on the safe side, you may consider only asking the seller to pay half of the closing costs. Things may also swing in your favor on this front – if, for example, the home inspector finds issues with the home that will cost you money to fix, you may ask for the seller to cover closing costs as a concession for this. 
 
Negotiate with the Lender
Yes, you can do this too. Once you have your loan estimate, you can begin negotiating each fee on the list with your lender. If there are confusing or obscure fees, ask that they be removed. Request that you receive a closing disclosure form, which details your closing costs instead of just listing them. Compare your closing disclosure to your loan estimate and ask your lender to justify any discrepancies. This can make a big difference if there was anything there for you to catch! 
 
Don’t Overpay on Discount Points
These are an upfront fee paid at closing that allows a new homeowner access to a better mortgage rate than “market value”. They can also lower your APR. They are paid as a percentage of your loan. For example, one discount point covers 1% of your loan size. Sounds great, right? There’s a catch! If you aren’t planning to live in your new home for at least seven years, this is wasted money. Reduce your closing costs by paying the proper number of points for your particular situation – which may be zero. Remember, they’re tax deductible, but can’t be refunded once you commit to paying them. 
 
Another thing to be aware of when it comes to discount points is the interest rate environment. If you’re already buying in a low interest rate environment, you don’t need to pay for a ton of interest points to lower your interest rate even further. These points add up fast with one point being 1% of your loan value, and for each point you purchase, you’ll have to live in the home for longer if you want to break even. Consider both these two things when it comes to purchasing discount points and you may save a bundle come closing time! 
 
Lock Your Mortgage Rate at the Right Time
There is a lot to be said for the idea that the timing of locking your mortgage can be up to luck. If you do it right, you can lower your closing costs by nailing the right time frame. Rate locks are typically available in 15 day increments up to 60 days, and then in 15 or 30 day increments afterwards. The longer your rate lock, the more you’ll pay, meaning a 30 day mortgage lock is less expensive than a 60 day lock. 
 
The additional cost of a longer mortgage rate lock are paid at closing. See where we’re going with this? An extra 30 days on your rate lock may add up to 25 basis points (or 0.25%) to your mortgage rate! This doesn’t mean you should always choose the shortest rate lock time, though. If you don’t fund your loan during the originally agreed upon lock in window, you’ll be fined by your lender. You can, however, ask for a rate lock extension, which adds a little time onto your rate lock window. It usually works out that a 30 day rate lock window plus a 15 day extension is cheaper than a 45 day rate lock from the start. You can keep your closing costs a little lower by accurately choosing the best rate lock periods. 
 
Shop Around
This may sound obvious, but one way to ensure you have low closing costs from the very start is to shop around for the lender that offers the lowest closing costs. You can ask lenders to match closing costs offered elsewhere, and they may agree. There are some services included in closing costs that you are allowed to shop around for as well. These include the pest inspection fee, the survey fee, the title search, and others. You don’t have to go with the provider your lender suggests unless you have signed a document waiving your right to do so. You can try for a lower price on the same service elsewhere. You’ll be able to see your expected closing costs on your loan estimate. Use these numbers to help you shop around and find better deals, thus lowering your closing costs.
 
Evaluate Your Loan Estimate
Bet you didn’t know you were allowed to do this, did you? When you get your loan estimate, don’t just accept it as fact. Ask your lender to go through each and every single charge with you in person. Ask them what each fee covers and why it costs that much. By doing this, you can identify padded or extraneous fees. You may also see two fees with very similar names, implying that you’re being charged twice for the same thing. It happens! An example is being charged for both processing fees and underwriting fees. You must review your loan estimate carefully. By doing so, you could save yourself some money come closing time. 
 
Other Ways to Save
There are a few random other things you can do to lower closing costs. If your new home was recently appraised  (say in the last year), you can probably skip the cost of having it appraised again and waive this service. You can also save on title insurance by asking for a re-issue rate when you renew your title insurance for a refinance. 
 
Closing costs can seem daunting and stressful, but there are many things you can do to lower them. If you play your cards right, you’ll be thankful that you took the time to learn how to save a few dollars!