3 Mortgage Red Flags You Need to Avoid When Home Buying By Theresa Williams-Barrett, VP of Consumer Lending and Loan Administration at Affinity When buying your first home, you can sometimes get so caught up in the excitement of it all that you don’t pay close enough attention to the details of the deal. When it comes to selecting your mortgage offer, you need to be especially vigilant. It is possible that some banks may advertise offers that look great on paper but have hidden costs and conditions. So, if you’re in the home buying process, you need to watch out for the following three “red flag” mortgages that mean your offer isn’t all it seems to be. Red Flag #1: When they offer you a rate that’s lower than the APR. When a mortgage's APR is much higher than the actual rate, it means that the fees are a lot higher, too - and you'll be paying them over the life of your loan. A low rate might be enticing, but you have to consider the long-term cost. Red Flag #2: When you have to pay for discount points. One approach used by some financial institutions to advertise a low rate is to include discount points. Keep an eye out for whether points are required and be sure to see what rates you can get without points. Doing so will give you a more accurate sense of the difference between the lenders you are considering. It’s important to discuss with a Mortgage Loan Officer just how long you intend to live in your home in order for them to assist in determining if discount points is a good option in your situation. Red Flag #3: When you can get cash back but you have to put more cash in. Cash back offers tend to be a bit tricky, because they may include hidden costs. Ultimately, it's important to look into the details of these offers and crunch the numbers. What seems like a great deal initially, may not be over the life of your mortgage. With Credit Union Membership, You Get Better Home Buying Options Some financial institutions apply what we call ‘junk fees,’ which covers the cost of handling your mortgage application. Affinity doesn’t. If you get a mortgage loan estimate from a bank, you can bring that estimate to us. We’ll review the offer free of charge and likely offer alternatives or other options that can best fit your personal needs. A rebate may be available at closing through one of the Home Advantage1 real estate agents in our network! A member can receive a rebate on the property they are selling as well as the one they are buying. Sounds like a really great deal on the surface, and the deeper you dig you’ll see that it actually is one, with no surprises lurking for the unsuspecting. At Affinity we’re doing all we can to educate you, the member, during your home buying process. And making sure that you’re provided with the best possible mortgage deal for you. Additionally, we are a great resource for further education on all the details of buying a new home and reaping all the financial rewards of homeownership. See our Affinity Connect blogs on whether or not 100% financing is right for you, closing the deal on buying a house and the benefits of getting a Home Equity Line of Credit (HELOC) once you’re a homeowner. For more information on getting a mortgage with Affinity, click here. * NMLS #1389903 1 Home Advantage This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments regarding the matters related to your condition are made.