What Should I Look For?

Alicia Porter is suffering from numbers overload. “I’m trying to finance a house and they’re are just too many options available,” she said.

My parents said when they bought their home, the bank expected a 20 percent down payment and offered a fixed rate, 30 year mortgages.

Now there are all these new mortgage products available. What are the most important questions to ask before I apply for a mortgage??

The Federal Deposit Insurance Corporation, best known as the government agency that insures bank and thrift deposits, recommends examine your options carefully. Ask:

1. How much the monthly payment will be, as well as when and how much it could increase. Make sure you can meet the loan payments now and in the future, especially if you are considering an adjustable-rate mortgage.

2. Whether there is a balloon payment and if so, when and how much will be due. A balloon payment is a large, lump-sum payment due at the end of the loan term. They are most often associated with mortgages that offer low payments in the early years, but require you to refinance the loan after a certain period.

3. The annual percentage rate (APR) and whether it is the lowest rate available. The APR you are offered depends on your credit score, the value of the property you are buying and other factors.

4. The number of points, fees or other charges that are being added to the monthly payments. You have to decide whether it is better to pay the charges at closing or roll them into the loan.

5. Whether the loan includes fees for credit protection that would cover the loan payment if I die, become ill or unemployed. You may not need the extra protection, or you may get a better deal from your insurance agent or other sources.

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