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Ask Farnoosh: Am I Getting a Good Deal on My Mortgage?

Tom posts on Facebook: What questions should you ask a loan officer as you work through the mortgage approval process? How do you know if you're getting the best deal? What should you be wary of?
 
With mortgage applications ticking higher in this low-rate environment, it’s important you stay informed throughout the process, which means asking your loan officer lots of questions. And if any answer sounds too good to be true – trust your gut! “If you see offers for prices [or rates] that seem way below everyone else's, your response should be ‘how is this possible,’ not ‘I'll take it,’” says Keith Gumbinger, vice president at HSH Associates, a mortgage information publisher. “Feel free to ask for clarification in writing.”
 
At the least, Gumbinger says, come armed to the first meeting with the following questions:
 

  • How long is my commitment period or rate lock?
  • How long has it been taking the lender to close loans similar to mine?
  • What happens if the loan doesn't close in that time? What’s the lender's rate-lock extension policy?
 
“You will want a rate lock, which lasts at least as long as it is taking for the lender to close loans,” says Gumbinger.
 
Finally, it may seem strange, but do ask for the name, number and email address of your loan processor. “Knowing this can facilitate direct communication, eliminating the loan officer as a go-between for document requests and submissions and such,” he says.

[Click here to check home loan rates in your area.]
 
As for scoring the “best” deal, this will partly depend greatly on your financial preparedness. If you go into the process with a credit score in the high 700s, low debt to income, substantial home equity and having done some research on rates and received lender recommendations from friends and colleagues, you’re more than halfway there to a “great” deal. The other part of the equation is, of course, the price and service you receive, “and the importance of each is different from borrower to borrower,” says Gumbinger. “Borrower A might value low price over more hand-holding in the process [than Borrower B], and vice-versa.”
 
Ibrahim asks: I am single, self-employed and have no health insurance. What amount should I be putting away towards health savings and insurance?
 
Dear Ibrahim,
 
Without a whole lot of details related to your health condition, age, location or current medical needs, it’s hard to give you a precise recommendation. But for you and all self-employed individuals scratching their heads over this major expense, begin by evaluating your anticipated medical costs. “You can go by last year’s [expenses], unless your health is declining, in which case expect [to pay] more,” says Amy Danise, editorial director at Insure.com. Now, as you review plans available to you on the open market, weigh that estimate against a plan’s out-of-pocket requirements such as deductibles, co-payments and co-insurance. The goal is to find a plan with adequate coverage you can afford. For some individuals it may be just a couple hundred dollars a month. For others, it may be in the thousands of dollars, again, depending on their health needs.
 
While tackling the insurance marketplace and finding affordable care is easier said than done, The Affordable Care Act intends to simplify the process, says Danise. State health insurance marketplaces are supposed to be up and running by October, and come January, the law mandates that everyone have insurance. “It’s supposed to become easier to compare health plans in the exchanges – like apples to apples,” she says. And states are supposed to offer “health insurance navigators” to help you choose the right plan.
 
If you’re young and healthy you may also want to check out rates online for an individual policy at sites like esurance.com and ehealthinsurance.com. Another low-cost option for some freelancers is group medical insurance offered by the Freelancers Union. Health insurance premiums cost between $225 and $603 a month for individual members. The union also has options for families and other benefits like dental care.
 
In the meantime, if you need medical assistance like a prescription, dental care, immunization or general primary care, the Department of Health offers a site where you can find health care for free or at reduced cost at certain local hospitals and clinics. All are eligible to visit a community health center, whether they have insurance or not. Your bill will be based on your income.

Got a question for Farnoosh? You can reach her on Twitter @Farnoosh or email her at farnooshfinfit@yahoo.com.
 

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