My parents were snowbirds. After my father died, my mother decided to give up life on the road and buy a home. Mom never had credit in her name or made any solo decisions of this magnitude. I was alarmed. I knew she had been sheltered, was naïve, and the buyer in a real estate transaction rarely has sincere representation. I knew bereaved seniors could be identified as an easy mark and very likely overcharged for a mortgage.
Before she started shopping for a home I helped her set a price range. She planned her budget for monthly payments within her comfort zone. The realtor showed her several houses. Most of the houses exceeded the price. Mom was adamant and our judgment prevailed. Because Mom trusted me to have her best interest at heart, she refused to buy more than she could comfortably afford.
We sat on the front porch with a pencil and tablet taking notes while I talked. I explained the mortgage application process to her. Closing costs including loan origination fee, mortgage insurance, escrow, interest rates, mortgage length, and the value of interest rate buy down. I estimated her closing costs and calculated the payments for 15 and 30 year mortgages. Based on personal experience, I gave my opinion on what interest rate and fees she should expect. If they were higher, my instructions were to stop, walk away, and do not pursue a loan from that lender.
My recommendations for her to get the best value:
Apply with a local bank not an independent mortgage broker to reduce fees
Make a 20 percent down payment to avoid mortgage insurance premiums
Apply for a fixed rate mortgage of at least $50,000
15 year term
Armed with my notes from that sunny afternoon, Mom applied for a mortgage to buy her home. The bank provided booklets and her mortgage consultant explained the terms. They matched the paraphrased explanations I provided. My estimates and calculations were within a few dollars and slightly higher than the mortgage she received. For us it was a happy ending. Most buyers do not receive the personal attention I was able to provide give my mother. It is time consuming in a world where time is money. However an opinion from someone you trust or a disinterested third party (one that doesnt have a horse in that race) may save hundreds if not thousands of dollars.