Being a Smart Borrower

Mortgage rates, terms, requirements and settlement service costs vary from lender to lender. For the best deal, check out commercial banks, savings and loans, credit unions and insurance companies. Compare rates and requirements on appraisals, credit reports, surveys, title searches, settlement service costs, title insurance fees, points and prepayment penalties.

Ask lenders if their own customers get more favorable terms. it may pay to transfer accounts or credit cards to their facility. Ask about an open-end clause, allowing you to borrow more money later without refinancing. Ask potential lenders to provide a written good-faith estimate, comparing each type of mortgage line by line. Ask about capping an adjustable rate mortgage, to limit the amount the interest can increase each adjustment period and overall. To avoid negative amortization (interest being added to the mortgage's principal), make sure your payment amount rises with each interest rate increase. Ask about a conversion provision allowing you to change to a fixed rate mortgage at a specified point in the life of the ARM.