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Stuck in the Home Mortgage Abyss?

Brenda Sammon
Educational Opportunities: 
Home > Education & Events > October 2017 > Stuck in the Home Mortgage Abyss?

Did you find out too late that the loan and lender you select for your rural home mortgage should be just as important as the location you explore or the home on which you place an offer? When things go wrong with a mortgage, you end up paying for it in time, money, and stress.
So what now? Mortgage rates are still relatively low. If you’re stuck with an adjustable rate mortgage (ARM) or have an upcoming balloon payment looming over your head, it’s time to take back control. Put some time into doing some homework to familiarize yourself with the process and how it works. When you’re ready, start interviewing lenders about their refinancing options for rural properties. Here are six questions to ask:
1. What is the required down payment?
A variety of home mortgage loan types are available and not all of them require the same down payment. Make sure to ask how much you will be required to put down and, if it’s less than 20%, ask if taking on private mortgage insurance (PMI) will be an additional requisite. We recommend putting down at least 5%, as it could save you thousands over the lifetime of your loan.
2. Does this lender deal with the types of properties you are looking at? 
Not all lenders finance rural properties. Are you looking at a manufactured home? Is it a larger rural acreage?  Is it income producing? Make sure to find out up front that they are equipped to deal with the type of properties you’re interested in. At Compeer Financial, we specialize in rural home mortgages
3. Is it a fixed–rate or adjustable-rate mortgage?
A fixed–rate mortgage keeps your interest rate and mortgage payment locked for the entire duration of the loan. An adjustable rate mortgage (ARM) can change after a designated period, depending on the market, potentially increasing your monthly mortgage payment.
4. Are there any pre-payment penalties on the loan?
In exchange for a lower interest rate or lower out-of-pocket costs up front, some lenders will charge a pre-payment penalty. Depending on the terms, the pre-payment penalty might have to be paid before refinancing or selling the home within a designated period. It is important to know beforehand exactly what your loan requires.
5. What closing costs are associated with this loan?
Closing costs typically fall between 2% and 5% of the total loan amount. A large enough range to make this question an important one. Understanding your commitment and planning for a way to earmark that amount will help with your stress level and make the process go more smoothly.
6. Are points included on the interest rate quoted?
Points are upfront fees equal to a percentage of the loan amount. Each point paid reduces the interest rate on the loan. It’s important to clarify whether the quoted interest rate includes points and if so, how many.
It pays to shop around. 
According to a survey conducted by the Consumer Financial Protection Bureau*, only 47% of consumers shop around for a home loan and, for those who do, rates can vary by as much as a half percent from lender to lender. This can make a huge difference over the life of the loan. When obtaining a mortgage for your home in the country, you are the customer and you have the right to select the best lender for you. Being prepared, doing your homework and vetting prospective lenders will all help you feel as comfortable with your mortgage as you will with your new home.

Not sure where to start? Search for the rural home specialist in your area. Our team is ready to help you reach your country living dream.
*Consumer Financial Protection Bureau Report, January 2015: “Consumers’ mortgage
shopping experience - A first look at results from the National Survey of Mortgage Borrowers”
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