Getting a Good Mortgage These Days
The economic recession has led to the domino effect of disadvantages especially experienced in the real estate industry. Most first time home buyers have then decided to postpone their purchase endeavor due to the lack of sufficient financing. This was also the same case for financially hard up homeowners who needed additional funds for various purposes. However as the economy shows some signs of recovery, today’s market may present much favorable financing and mortgage options. Then again, there are some pointers you have to consider in order to get the best deal.
Firstly, you have to groom your financial status. Many lenders are very much concerned with a potential borrower’s fiscal background, and they are most likely to require you to submit your credit report. If your current credit score is in bad shape, look for credit repair assistance from professional financial advisers. Ensure that all your debts are either paid for or regularly maintained.
You should also set your mind on how much you can really afford for purchasing a home or need for refinancing. Be realistic in determining how much you will borrow. Using a mortgage calculator, you will have a pretty good idea as to what mortgage option would match your monthly income. Consequently, despite the premise you actually lack funds, you have to prepare for expenses such as professional fees and costs for accessing different documents like your credit report.
In addition, all documents proving your financial status, from your income to assets and liabilities, must be filed together. Lenders and sellers require certain documents to gauge whether you are capable to enter and finish a deal.
Once these preparations are set, carry on with shopping for the best mortgage. Regard your mortgage like any other commodity. Devote as much time in shopping around for different types of home loans, which are pretty much as varied as the lenders offering them. Seek quotes from thrift institutions, commercial banks, mortgage companies and credit unions. If you are not qualified for conventional mortgage types, government-assisted programs like the FHA, VA, or Rural Development Services offer significantly lower rates and payments.
You might also consider hiring a mortgage broker. This service provider basically takes over your task to look for various mortgages from several lenders. However he is not duty-bound to obtain the best deal for you except when you permit him as your representative agent. Prior to finalizing a contract with a broker, be mindful of the fees he may ask for his service.
While a broker may save you from taxing legwork of mortgage shopping, you still have the final say as to which mortgage deal is the best. Get at least three quotes under the fixed-rate type and another three under the adjustable-rate mortgage. Compare their interest rate, annual percentage rate, loan term in years, points, fees and other costs of one option with another.
Down payments and private mortgage insurances are also part of most mortgage deals. Lenders nowadays require from 5 to 20% of the home purchase price. But for lower down payment percentage requirements, lenders typically oblige the borrowers to purchase private mortgage insurance. Accordingly, ask the total cost of the monthly mortgage due including the insurance premium.
The last crucial part is negotiating with the lenders. There are some lenders that can be flexible in making loan terms more consumer-friendly. When all terms are favorable for both parties, ask for a written lock-in contract from your lender. This is your form of security against sudden rate increases or unexpected fees. Ensure as well that the lowered rates or points are not offset by increasing other components of the loan.
Ultimately get yourself ready for the physical, mental and emotional stresses involved throughout the process of finding a good mortgage. After all, patience is no longer just a virtue but a necessity so you can find the best deal there is.
