Buying a new home can be exciting, but many decisions in the process can create anxiety. The best way to experience a seamless buying process is to be prepared for the financial realities of home ownership.
Choosing the perfect mortgage lender should be a top priority before you even begin your house search. We offer these top five tips for finding and securing the right loan for your needs:
- Review your credit score
- Research loan types
- Research current local and national lenders
- Compare rates from many lenders
- Obtain loan Pre-approval
1. Credit Score
The most important step before you consider buying a house is to check your credit score. There are numerous ways to access your credit score online, and many banks and credit card companies now offer monthly credit rating updates on your personal accounts. You have the right to know your score from all three major credit bureaus: Equifax, Experian, and Trans Union. Knowing your score and how to improve your creditworthiness is crucial to getting the lowest mortgage rate possible. Remember, a mortgage is a fifteen to thirty-year commitment and interest adds up! Some quick research online will offer the current credit score standards in the lending market and help you decide how to proceed. Paying off debts and saving money for your down payment is a strong signal to any mortgage company that you are a good risk for loan repayment.
2. The Best Loan for You
Researching to find the best loan for your lifestyle is an excellent step in forecasting the affordability of home ownership. You may qualify for a government-backed specialty loan through the FHA or VA programs. Finding a lender that knows the rules and options for these types of loans will be to your advantage. Be aware of how much down payment is helpful in securing your best financial outcome. Read the fine print and make sure you understand points and closing costs for each type of loan you are considering. Many lenders offer guidelines for helping you manage your loan obligations. Consider talking to real estate agents you trust and ask for recommendations on lenders. If you have a current mortgage and you have been happy with the relationship then, by all means, seek a new mortgage with them! Research is king when it comes to finding the best loan type to fit your mortgage parameters.
3. Local and National Lenders
When searching for the right lending partner, it is best to research the many options available to you. Local credit unions and Savings & Loan lenders are typically more “relationship” oriented with their customers. Expect to sit down face-to-face with local lenders and be prepared to share your financial history in detail. Big banks and online lenders may seem like a great fast-track option but be aware of the lack of personal interaction especially in your initial inquiries. Many lenders are vying for your business so make time to research your options to find the best possible partnership for you.
4. Compare Interest Rates
Taking on a mortgage is no small commitment. Understanding current rates can save you thousands of dollars over the life of the loan. Researching the absolute best rates available to you and understanding the terms of payment will help keep your financial responsibilities on track. Front-page offers via lenders on the Internet are seldom as advertised, but with effort, those fine details can become a comparison tool for finding the perfect loan for your needs. Knowledge is power and having the current rate comparisons from multiple resources may give you a negotiation advantage when you get down to the nitty-gritty of your actual loan agreement.
5. Loan Pre-Approval
Having loan pre-approval positions you at the head of the pack when making an offer on a new home. A seller will feel more secure in accepting an offer that is backed with a confirmed loan approval. Knowing your approved loan limit hones the parameters in your house search and will help position your offer ahead of the competition. Making an effort to have a pre-approved loan is a positive step to smooth the way for finding and completing your home search.
For most individuals buying a home is an expensive and intimidating process. Taking the time to be prepared financially clears many hurdles in your home search. The Gleason Team is happy to talk with you about local and national mortgage resources and share information and expectations from lenders. The process of securing the right loan is as important as finding your dream home!
