Denver Home Loan – What You Need About The Process

Getting a Denver home loan does not have to be a complicated affair.

But it helps tremendously if you know what is going on throughout the whole process.

Many people are taken advantage because they are unfamiliar with how things work and do not know the right questions to ask.

To begin, the things you need to be concerned about are the types of mortgages you can get, how brokers and banks get paid, and questions you need to ask.

Types Of Mortgages

There are two from which to choose. There is the fixed rate mortgage and then there is the adjustable rate mortgage, known as an ARM. The difference between these two is that an ARM is fixed for a few years while as the name says, a fixed rate mortgage is fixed for the life of the mortgage.

You might wonder why anyone would choose an ARM over a fixed with interest rates being so low right now. Well, someone might choose that over the other because it will give an even lower rate for the first few years.

If they are planning on selling before it increases, then it is worth it for them.

If you are not planning on selling and are planning on staying there for the long term, it is much better to go with a fixed rate mortgage.

How Denver Home Loan Officers Get Paid

When you go through the process, there will be an upfront fee they will charge you. They also get paid by the lender and the amount they get paid increases as the interest rate increases.

If they manage to get you to lock in at a higher rate, they will get paid a rebate or bonus for doing so by the lender.

Questions To Ask

Do not be afraid to ask questions in regards to how they get paid. There are two forms ways they get paid.

The first is the origination fee which typically equals 1% of the loan amount.

The other commission is a rebate the lender (whether a bank or mortgage company) pays that increases as the loan officer increases your interest rate. Banks and Mortgage bankers do not have to disclose this rebate. But it is still there.

That’s why interest rates vary from one bank or mortgage company to the next. Some are trying to make a larger rebate than others. Some will only mention it in passing, even if you ask about it.

You should ask them about it to make them tell you.

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