Shopping for a mortgage is a lengthy process, although some companies will lead consumers to believe that they can provide faster service to get you in your dream home. Unfortunately the housing market experienced a significant period of depression because of so many risky mortgages that were handed out like candy and getting a mortgage today is not as easy as it once was. Mortgage rates have been at all time lows and continue to fluctuate daily. In some cases, I’ve heard of some friends who had locked in a favorable 30 year mortgage rate in January of this year and they are already looking to refinance. Now that is finding a good deal on your mortgage rate! If you’re looking to refinance or just get a mortgage rate for the first time, here’s some to tips to help you out.
Finding a Mortgage
You can make use of the Internet to find the best interest rates on mortgages in your area. Starting with your own bank may be your ideal starting place because you already have a relationship with the lender. If not your own bank, a local credit union or smaller community bank may be the best resource because they are looking to bring in quality local customers.
Be wary of mortgage lenders who may not be very established, who received bad ratings from the Better Business Bureau, and those who push high-pressured sales tactics to get you to sign for a mortgage. The companies advertising online and through other media resources claiming to make it easy for you to own a home may not be working on the up-and-up. There is no easy way to apply for a mortgage and the process is far from easy. You will end up paying for a mistake for years to come.
Getting a Deal on Your Mortgage
A decision to take out a mortgage loan may be the biggest financial decision in your lifetime, especially if you are a first-time homebuyer. The only tried-and-true way to get a great deal on a mortgage is to keep your own personal finances in check. Here are the primary components of ensuring a good interest rate on a mortgage:
If you do not have excellent credit (720 or higher), you may be charged a higher rate of interest should you be approved for a mortgage at all. Mortgage companies are tightening the purse strings since the housing market crash and expect borrowers to be able to prove financial responsibility. The best thing to do is take the time to check on and improve your credit score before even applying for a mortgage loan. Pay your bills on time each month and do not spend more money than you have.
Save For Down Payment
A lender wants to see commitment on the part of the borrower. Saving a sizeable down payment to put toward the house is one sign to the lender that you are dedicated and ready to purchase your own home. At least 10% down is required unless you go for a VA, USDA, or FHA mortgage loans which require a smaller percentage down. Ideally, a 20% down payment will decrease your interest rate and make you eligible for the best mortgage deals currently on the market.
While situations may arise when you find yourself desperate to get a mortgage loan, the majority of people who want to be homeowners will know in advance what their housing goals are. If you are in too much of a hurry to buy a home, you will likely make decisions that are not in your best interest. Don’t rush through the process. Instead, take the time to speak with the different lenders in your area about what offers they have available. Decide what kind of mortgage makes sense for your situation and finances. The more legwork you do before applying for a mortgage, the more options you’ll have to get a mortgage.