It is very appealing since the interest rate seems extremely low, but later on you will be paying higher interest rates, sometimes more than the current market rate. Do not get fooled by this since it is nothing like an adjustable rate mortgage and is only there to squeeze the most money out of you.
Another very attractive offer lenders provide you with is by giving you a low rate which is only applicable for the first few months of the loan. They will quote a rate which is about 2% lower than the current market rate. This is known as a teaser rate.
Most people who are unaware of how the mortgage process works usually approach banks to get a loan for their dream home. Banks, however, have extremely poor customer service and take a long time to approve the home loan.
While applying to a bank, you are required to fill out a number of forms and get a number of documents before applying for the home loan. Banks have a tendency to treat you like an account number rather than a person who desperately needs a home loan. This is why you should not approach a bank to get a loan for your dream home.
Another big mistake first time home buyers make to get their home loans is calling up a number of lenders to get quotes. This is certainly a very foolish thing to do since you are letting the lender know that you do not know how to get home loans and they take advantage of your desperate situation. Whenever contacted by phone, most lenders quote a good interest rate just so that they can get your application. Once you are committed to them they will give you a loan at a much higher rate. If you contact by phone, you do not even have any proof of the rate which was quoted by them and thus fall into their trap.
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