Looking for a home mortgage will help you get the best financing deal. A mortgage, regardless if it is a purchase of a home, home equity loan or refinancing is a product, so the terms and prices are negotiable. It is helpful to compare the costs involved to obtain a mortgage. A thorough research on the best deals could save you thousands of dollars.
If you are looking right now for a home mortgage, here is what you can do to find and qualify for the cheapest rate possible.
1. You have to shop around for a loan as hard as you would a car or a Caribbean cruise. Try to compare fees and interest rates from at least a dozen lenders by looking at newspaper ads and online sites. Loans that offer the lowest rate with $1,000 fees or less are usually the best.
2. Check out your Credit Report since this is the most important determining factor of the amount you can afford for a mortgage. If you find errors, you could fix them by writing a letter to the credit bureau, explain the problem, and ask them to do an investigation. Attach whatever proof you have and send everything through a registered or certified mail.
3. Pay your dues on time. Thirty-five percent of your credit score is based on whether you pay your bills on time. When applying for a mortgage, it is important that you do not have late payments on your report within the last six months. More than anything, lenders want to know that you would be able to pay your dues promptly every month. If your credit history reflects a skipped payment or payment that has been a few days late, you will be considered as a risk and borrowers in that category pay higher interest rates or worst, denied the mortgage.
4. To qualify for the best mortgage, you should be able to pay down your credit card debt. One-third of your credit score is based on the amount of available credit you have consumed. If you owe $8,000 on your card with a $15,000 credit limit, you have used more than half of your credit available and that will appear excessive. Every time your debt-to-available-credit ratio goes up above fifty percent will get you penalized. Reducing your balance to less than half of your limit on each card that you possess will have a positive and immediate impact on your score.
5. Refrain from applying for a new credit card and other kinds of loans. Your prospective mortgage lender will check your credit report when you fill out their application and those are noted on your history. Each inquiry could lower your score by up to 12 points.
6. The mortgage rate that you qualify depends on several factors and one of which is your years on your job. Different lenders will look at work stability as the key factor to determine the loan program that you qualify. Discuss with your lender about the best deal for you.
If you will borrow over eighty-percent of the value of the home, you will most likely have to carry mortgage insurance as part of your monthly fee. This fee normally drops off as soon as you have obtained twenty-percent equity in your home. You can buy out the mortgage but this often results in a higher rate of interest. You should be able to weigh the best option for you based on your needs and plans. A qualified mortgage consultant can help in evaluating your credit report. He or she has strategies and tools to ensure you are managing a credit in such a way to have a higher credit score.
The rates of mortgage are currently volatile. Some lenders adjust their rates several times everyday and usually based on the current market rates. Others change rates once a week. Once again, it is necessary to shop around for the best rates before you settle on one.