Understanding Your Mortgage Options

Know your options when trying to find the right mortgage for you. Millions of people do it every year, but many of them do not put as much importance on the search as they should. Mortgage rates change from company to company so it is very important that you do your research and get as many quotes as possible to get the best rates possible. A mortgage essentially pledges a property to the lender as security for payment of a debt. Also, learn about the different types of loans you can get. It does make a difference.

An adjustable-rate mortgage (ARM) has a low interest rate in the early years, while a fixed-rate mortgage stays constant at a higher rate. With an ARM, you'll pay less for short-term ownership of your house. On the other hand, if you think you may keep your home for more than 5 years, a predictable fixed-rate mortgage is probably a better choice for a loan.

Some unscrupulous lenders will attempt to take advantage of innocent consumers. The Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) protect you against discrimination when you apply for a mortgage to purchase, refinance, or make home improvements.

Your Rights Under ECOA
The ECOA prohibits discrimination in any aspect of a credit transaction based on:

race or color

religion

national origin

marital status

age (provided the applicant has the capacity to contract)

the applicant’s receipt of income derived from any public assistance program

the applicant’s exercise, in good faith, of any right under the Consumer Credit Protection Act

Your Rights Under FHA
The FHA prohibits discrimination in all aspects of residential real-estate related transactions, including:

making loans to buy, build, repair, or improve a dwelling

selling, brokering, or appraising residential real estate

selling or renting a dwelling

It also prohibits discrimination based on:

race or color

national origin

religion

familial status (defined as children under the age of 18 living with a parent or legal guardian, pregnant women, and people securing custody of children under 18)

any handicap

Lender Do’s and Don’ts
Lenders must:

consider reliable public assistance income in the same way as other income.

consider reliable income from part-time employment, Social Security, pensions, and annuities.

consider reliable alimony, child support, or separate maintenance payments, if you choose to provide this information. A lender may ask you for proof that this income is received consistently.

if a co-signer is needed, accept someone other than your spouse. If you own the property with your spouse, he or she may be asked to sign documents allowing you to mortgage the property.

Lenders cannot:

discourage you from applying for a mortgage or reject your application because of your race, national origin, religion, sex, marital status, age, or because you receive public assistance income.

consider your race, national origin, or sex, although you will be asked to voluntarily disclose this information to help federal agencies enforce anti-discrimination laws. A creditor may consider your immigration status and whether you have the right to remain in the country long enough to repay the debt.

impose different terms or conditions, such as a higher interest rate or larger down payment, on a loan based on your race, sex, or other prohibited factors.

consider the racial composition of the neighborhood where you want to live. This also applies when the property is being appraised.

ask about your plans for having a family. Questions about expenses related to your dependents are permitted.

refuse to purchase a loan or set different terms or conditions for the loan purchase based on discriminatory factors.

require a co-signer if you meet the lender’s standards.