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Module 3
Preparing for Home Ownership
Types of Home Loans
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Home Loan Shopping Checklist

Critical Points to ConsiderThe following Home Loan Shopping Checklist will help you when you are talking to lenders about a home loan. When comparing a loan, some critical points to consider are:
  • whether it is a fixed or adjustable rate
  • the loan term (15-year, 30-year, 40-year)
  • the interest rate and whether it is locked in
  • the Annual Percentage Rate (APR)
  • any points being charged
  • total of all lender fees
  • monthly payment
  • potential for large increase in monthly payment
  • potential for negative amortization
How to Get a Lower RateThe interest rate and discount points are directly related. The more discount points the borrower pays upfront, the lower the interest rate, but the more cash is required at closing. This is often called “buying down the rate.” You can work out mathematically whether the lower interest rate is worth the cost of cash upfront to pay the points. Calculate the savings resulting from the lower monthly payment and see how many months it would take to break even on the cost of the points. If you choose a “no out of pocket closing cost loan” the closing costs will be included in the loan amount, and you will pay interest on that additional amount.
Download NowDownload the checklist to compare rates and fees when you are shopping for a home loan. A sample column has been completed for you.
Name of Lender: ABC Mortgage Name Name
contact person: Jane Doe
phone number 800-555-5555
Web site address Abcmort.com
home loan amount $150,000

Type of Loan:

fixed rate
ARM
FHA
VA

 Fixed rate
Interest rate 6%
Points 2
APR 6.25%
Length of Loan (15, 20, 30, 40 yrs) 30 year
Minimum Down Payment:

without PMI $30,000

with PMI $4,500

If PMI is Required:

upfront cost $1,500

monthly premiums $75

when can it be cancelled? Loan balance at $120,000

Escrow required for taxes and insurance? Yes (1/12 of tax payment and insurance premium)
Estimated Monthly Payment (PITI and PMI) $1,195
Fees:

application or loan processing $150
origination $150
credit report $30
document preparation 0
underwriting 0
appraisal $350
survey NA
flood certification NA
tax service $35
assumption (if applies) NA
attorney fees $250
title search and insurance $425
broker fees NA
taxes $150
other

Average time to process and underwrite home loan 30 days

Application options:

face to face meeting
via phone or FAX
online

 Face-to-face
Rate Lock-in:

upon approval OR at application? On approval
interest rate and points locked? On approval
written agreement? Yes
lasts how long? 60 days
Prepayment:

is there a penalty? if so how much? No
how long does the penalty period last? NA
extra principal payments allowed? Yes
Assumable? No

Payment Options:

monthly only
biweekly
automatic deduction

 Monthly, biweekly or automatic
ARMs Only:

initial interest rate NA
fixed period

adjustment frequency

index

margin

Rate Caps:

periodic
lifetime

 NA

Payment Cap:

can negative amortization occur?
is maximum LTV (including negative amortization) capped?

 NA
If Convertible: NA

when can you convert to a fixed rate home loan?

fees

index used

margin used

Download the checklist nowDownload Now
and compare your choices today!

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  Countrywide Home Loans, a division of Countrywide Bank, FSB is an Equal Housing Lender. © 2007 - 2008 Countrywide Financial Corp. Trade/service marks are the property of Countrywide Financial Corp., and/or its subsidiaries. All rights reserved. The content of this website is provided for the convenience of our readers and is for informational purposes only. Readers are encouraged to use the content of this website to supplement their knowledge and to also seek out other reliable sources of information prior to engaging in the home financing and home buying processes. The information featured herein is intended to be accurate and we will make efforts to keep this website updated. However, due to the rapid changes occurring in the programs, products, services offered within the home financing industry, we do not guarantee the accuracy of the information presented. Countrywide is not responsible for the contents of, or products or services offered on, third party Web sites and provides links to such sites solely for your convenience. This is not a commitment to lend. All rights reserved.