So you found your dream home, you’ve got a good credit score and the bank has just approved your loan. Before you sign the dotted line, make sure you read the fine print on that mortgage application.
Rodney Anderson of Rodney Anderson Lending Services reveals what to look out for:
1. Within the Truth and Lending Disclosures, look for the Variable Rate Feature. If that box is checked, be aware that you have an adjustable rate mortgage. So many people think they have a fixed-rate loan only to find out later in the fine print that it’s an ARM.
2. Also look for any Pre-Payment Penalties. Many lenders hide these in loan documents and borrowers don’t realize that if they pay off or refinance their loan within a certain period of time, they may be subject to a penalty.
3. Carefully read the Acknowledgement and Agreement section, which states that the information in the application is true and correct as of the date you sign it. Mortgage fraud is still rampant and if your income doesn’t match, the lender may be committing fraud. But it is you who is responsible if there is inaccurate information on your documents. Because everything is now done electronically, there is a higher margin for error. Review the documents days before closing if possible to make sure your income and assets match perfectly.