The word mortgage may frighten some people, but it doesn’t have to be scary. In fact, the more information you have, the better-equipped you are to negotiate the best possible mortgage and rate for your home loan. The goal is to get the RIGHT information though.
To break it down: a mortgage is a loan which is taken out to finance your home. It has many moving parts including insurance, interest, collateral, taxes, and principal. The mortgage rates indicate the interest you pay over time for the loan. For example, if your loan is set for 20 years, the amount of interest would be lower than if the loan was set to be paid over 30 years.
Mortgage lenders know better than to give out loans left and right. If you’re looking to buy a house, your loan officer wants to make sure you’ll have the means to keep paying your mortgage. Make sure you have pay stubs and copies of your W-2s in order to be considered for a loan, as many lenders will want to see at least two years of steady employment and earnings (taxable income) to evaluate your financial health.
It’s time to get your credit score in the best shape! A high credit score will be a huge benefit to you by providing a better interest rate, which will open up more loan choices! It’s helpful to jump on sites like AnnualCreditReport.com to get your free credit report. While these scores are not necessarily what a mortgage lender will pull, they will at least give you a starting point. If your score needs some work and your credit cards have balances, try to get them down to no more than 20% or 30% of your available credit card limit.
Paying your bills on time will boost your score as well. If you have any late payments showing, call your creditors and see if they are accurate or maybe they can be removed. Do not open any new accounts until you speak to a mortgage professional. Often, a new account on credit will initially drop your credit score. To be safe, call the experts at Upstate Mortgage and they can analyze the credit and the scores and help you decide the best way to obtain a good score.
Many lenders will have one set of rates and fees. A good mortgage broker, like Upstate Mortgage, will have many more options – from low to no-cost loans, to loans with credits given back to you to assist with closing costs. Most of the time they can get you a better rate and closing costs than a large bank, and the closing time will be far shorter. Additionally, a local professional always looks better on a pre-approval letter to a seller as well. There are many stories out there of the larger banks not meeting closings or not qualifying the borrowers adequately and the loan falling through before closing. This will not normally happen with an experienced lender who has the knowledge and expertise to make sure you will get to the closing table.
These tips can be a wonderful way to get you started on understanding the mortgage process. If you’re ready to discuss home-buying and rates in-depth, contact us to find out how we can help!