Follow these 5 mortgage tips to assure you get the best deal.
Meet Penny. She’s not an impulse shopper by nature, but when she finds something she likes, she buys it. Now that’s fine for the pretty sundress she found in the downtown boutique, but even Penny wouldn’t think to shop that way for everything.
If you’re shopping for a new or used car, for example, you wouldn’t think of buying the first one you found that matches your criteria. Even if you researched competing models, options and features, you still wouldn’t walk onto a lot, point at a car and say, “I’ll take that one.” Unless you’re looking for something rare — such as a mint 1965 Mustang Shelby GT350 in candy apple red — you’re likely to shop around.
The Best First Stop
When buying a home, you don’t settle for the first one you see. Do the same for your mortgage. Of all the mortgage tips you’ll read about, this is one you can literally take to the bank — or better yet, to an independent mortgage lender who has access to 12 different investors. Think of it as one stop to get to 12 institutional banks.
Even if an independent mortgage lender like GoPrime Mortgage, Inc. . (dba PrimeRate Mortgage Lending) can’t help you, he can direct you to a financial institution that can. Since mortgages are all he does, he knows the industry and the other helpers. That makes Prime the perfect first stop. Here are five other mortgage tips to help you get the best deal on the best mortgage for your situation:
1. Get Your Debt Under Control
Before you even start thinking about buying a new home, make sure your finances are in order. This mortgage tip will set you up to successfully impress lenders. It’s not necessary (or even recommended) that you pay off all of your debt or accrue thousands of dollars in your savings account. Just make sure you’re paying all your bills on time. If possible, pay down your accumulated debt to below 30 percent of your credit limit (or ideally to 10 percent of your limit to boost your credit score).
Check your credit score to be sure it’s high enough to get the best interest rates. Do the things you need to get your credit score to 700 or higher. If it’s at or below 600, you have work to do before you can afford to buy a house.
2. Get Pre-Qualified
While pre-qualifying for a mortgage loan doesn’t carry as much weight as a pre-approval — it’s the difference between an estimate and a loan commitment — lenders will pre-approve you as a no-cost service. So take advantage of that by getting pre-approved at an independent mortgage lender, such as Prime Mortgage Lending of West Asheville.
Review your credit rating, income, debt and debt-to-income ratio. Based on your financial stability, all lenders should give you a somewhat similar pre-approved amount. So before you start looking at homes, get pre-approved so you know how much you’ll be able to borrow.
3. Educate Yourself about Loan Types
Depending on your situation, you may qualify for a number of different loan types. Some require a hefty (20 percent) down payment. Some require no down payment at all. And you can find everything in-between. Some loans even allow you to roll the costs (see below) into the loan so you can come to the closing table with no money because you’ll have nothing to pay.
Work with a lender — or ask many of the lenders with whom you interact — which loan type they think is best for you. Getting that perspective, from many different sources, gives you insight not only into what’s best for you, but also into how some lenders work. Some, for example, try to fit you into a niche that’s best for them. Others, like independent mortgage lenders, offer a wider range of products.
4. Compare Costs
Mortgage tips don’t get better than this. Comparing costs is the main reason to shop around for a mortgage loan. Compare apples to apples, which is easier to do now that each lender uses the same form (called a TRID) that gives you:
- Interest rates
- Broker (or origination) fees
- Annual percentage rates (APRs)
- Fixed or adjustable rates
- All fees and closing costs
Depending on your loan type, you may have to pay some fees up-front. Other fees may be due at your closing. Make sure you know what to expect every step of the way. Learn these mortgage tips to be better prepared.
5. Negotiate Your Mortgage Deal
Mortgage rates change daily. Be sure to work closely with your lender. You can leverage your knowledge to negotiate your deal, especially if you have solid financial footing. In fact, the better your credit score and debt-to-income ratio, the more desirable you are as a homebuyer.
Trust your lender. Ask questions. Do your homework. These mortgage tips will help. Buying a home is a learning experience. Working with an independent mortgage lender like Zachery “Zack” Adam of Prime Mortgage Lending of West Asheville makes the process easier because mortgage loans are all he does. Contact him today.
