12 Questions To Ask Yourself Before Taking On A Loan

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Have I shopped around?

Never go with the first rate you see. Never go with the first lender you speak with. In my experience, you will speak to lenders who will tell you that the way they do things is “industry standard.” And that’s only semi-true. When we were getting a mortgage, we spoke to one bank that would only allow a 43 percent debt-to-income ratio. That’s a term we cover in “7 Personal Finance Terms to Know,” but it ultimately meant, whatever I make a month, the bank didn’t want my monthly mortgage payment to exceed 43 percent of that. They told me that most lenders would feel the same way. Then I spoke to just a few more and found that one allowed a 47 percent debt-to-income ratio, and another would go as high as 51 percent. I also simply found lenders offering much better rates than others. I came across some that were very new, so they were offering to cover closing costs and waive application fees in order to build up their customer base. There are so many lenders out there. Shopping around could save you thousands of dollars up front and/or over the term of a loan.