To help home buyers and homeowners better understand their home loan options, Countrywide is suggesting 10 Questions to Ask Before You Agree to a Mortgage.
Calabasas, CA (Vocus/PRWeb) June 12, 2007 -- Taking out a home loan to buy or refinance their mortgage on their home is one of the largest transactions most people make in a lifetime. Understanding the transaction is vitally important. To help home buyers and homeowners better understand their home loan options, Countrywide is suggesting 10 Questions to Ask Before You Agree to a Mortgage. These helpful insights are just a few of the many valuable ways to boost knowledge offered through the company's no-cost, no-obligation Home Ownership Mortgage Education program (H.O.M.E.).
"It is important for people who are about to take out a mortgage to enter the situation equipped with as much information as possible," says John P. McMurray, chief risk officer for Countrywide Financial Corporation (NYSE:CFC), a diversified financial services provider and member of the S&P 500. "Never move forward and agree to a mortgage until you're certain that you understand all of the terms and features of the home loan you're being offered."
Here are ten basic questions to ask when considering any mortgage loan:
1. Can the interest rate on the mortgage loan change? If yes, what is the formula and what are the "caps?" A cap is a ceiling on how high the interest rate can go over the life of the loan or for each adjustment period. What is the maximum "P & I" (principal and interest) payment on the mortgage loan?
2. Under what circumstances can the monthly payment change? One way payments can change is with a change in the interest rate on a mortgage loan.
3. How does the amortization work on the mortgage loan? Amortization is the process of paying off the mortgage loan balance (the amount borrowed) over time. On interest-only mortgage loans, there is a period of time where the home loan balance is not paid down at all. With "option" type loans, the mortgage loan balance can increase (i.e. negative amortization) if the borrower "opts" for one of the lower payments.
4. Does the mortgage loan have a balloon payment? A mortgage loan will have a balloon payment if the home loan balance is not fully paid off (fully amortized) by the end of the home loan term.
5. What other combination of rates and points are available for the mortgage loan?
6. Does the monthly payment include taxes and insurance? It is important to understand that ongoing monthly payment obligations as a homeowner typically consist of more than just repaying the mortgage loan, but also include taxes and insurance.
7. Does the mortgage loan have a prepayment penalty? If so, how does it work? What are the rate, points and fees on the same home loan without a prepayment penalty?
8. Is a full documentation mortgage loan available at a lower rate and/or at a better price?
9. What are the charges on the "GFE" (Good Faith Estimate)?
10. Should I establish an escrow account for the payment of my taxes and insurance? How does that work?
Providing a no-cost, no-obligation experience, the H.O.M.E. Web site
(www.HomeByCountrywide.com) offers an interactive learning center which includes comprehensive coverage of five topics: Basic Finance, How Credit Affects You, Preparing for Home Ownership, Steps for Buying a Home, and Life as a Homeowner. Also featured are extensive tools and resources, including downloadable checklists, worksheets and quizzes that assist home buyers and new homeowners.
About Countrywide Financial Corporation
Founded in 1969, Countrywide Financial Corporation (NYSE: CFC) - America's #1 home loan lender - (as ranked for 2006 by Inside Mortgage Finance, Feb. 2, 2007, Copyright 2007), is a member of the S&P 500 and Fortune 500. Countrywide is a diversified financial services firm primarily focused on real estate finance and related activities. Through its family of companies, Countrywide provides mortgage banking, capital markets, global operations and insurance, in domestic and international markets. The company is headquartered in Calabasas, California and has a workforce of more than 50,000 with over 900 offices. For more information about the company, visit Countrywide's Web site at http://www.countrywide.com.
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