Appraisal cost- the home appraisal will compare the value of your home to others in your neighborhood.

Application fee - this fee helps cover the cost of processing the loan

Points - a service fee equal to one percent of the loan amount. Sometimes, you can “buy down” the interest rate of the loan by agreeing to pay a certain number of points at closing.

Other fees, particularly for revolving lines of credit, may include annual maintenance fees, transaction fees, and fees for paying off the loan early. You should check with your lender to verify these fees prior to accepting the terms of the loan.

When inquiring about loans, be on the lookout for a “balloon” payment. Sometimes, loans are structured so that the borrower only pays interest for the first few years of the loan. These loans seem appealing, due to their low payments, but they can come back to haunt you if the terms of the loan include paying the balance of the loan in full when the loan expires. These types of loans are best avoided, and you should definitely ask about balloon payments when discussing your loan with the lender.

Something else to watch out for are High LTV loans. LTV stands for “Loan To Value” and it represents the ratio of the loan to your equity. While most lenders will lend you up to 80% of the equity in your home, some will lend up to 125%. Be very careful when approaching these loans, as they will leave you owing more than the value of your home! This can lead to disaster should you, for some reason, have to default on your loan. You could lose your home and more!

When applying for a loan, lenders will look at your credit history, your employment history and the ratio of your debt to income. While there aren’t really any set rules, lenders generally look for a debt to income ratio of somewhere between 25-50%. This is somewhat flexible, especially if you have a past history of paying your bills on time. The specifics will vary from lender to lender, but your best chances of obtaining a loan will come with a good payment history.

Your credit history will help determine how much you may borrow. The better your credit rating, the greater the percentage of your equity the lender will allow you to borrow.

Be prepared to show proof of your finances to your lender upon request. This may include tax returns, paycheck stubs, direct deposit receipts or 1099 forms. Your failure to provide such information may cost you the loan, or you may be forced to pay a higher interest rate.

Be truthful! It is a crime to offer false information when applying for credit!