If you want to make sure you make the right decision when it comes to a mortgage, then you’re going to want to read the information contained in this article. You never want to just learn everything as you go when it comes to mortgage companies. Instead of you feeding out of their hands, you want them feeding out of yours.
It’s never a good idea to lay low and say nothing to your mortgage lender if you are in trouble financially. Be open with them. Don’t give up just because your finances are dire – your lender will want to work with you if you talk to them about the situation. Give them a call to find out what you can do next.
Avoid fudging the numbers on your loan application. It is not unusual for people to consider exaggerating their salary and other sources of income to qualify for a larger home loan. Unfortunately, this is considered fraud. You can actually be criminally prosecuted, even though it doesn’t seem like a big deal.
If you’re thinking of getting a mortgage, you need to know that you have great credit. Lenders want a good credit history to ensure they will be getting their money for the home. Take a look at your report and immediately get to work on cleaning it up if you need to so that you can get a loan.
You may be able to add your homeowner’s insurance costs to your mortgage payment. One advantage of this is negating the need to make two payments. Instead of paying your mortgage and an insurance bill, you can pay both bills in one payment. If you like to consolidate your bills, this is a good idea.
Check out the interest rates for 15, 20, and 30-year term lengths. Many times the shorter the term length, the lower the interest rate. Although you may think your payment will be higher on a shorter-term loan, you can actually save money on your payment by choosing a lower interest rate and a shorter term.
Look into no closing cost options. If closing costs concern you, there are many offers out there where those costs are taken care of by the lender. The lender then charges you slightly more in your interest rate to make up for the difference. This can help you if immediate cash is an issue.
Don’t apply for new credit, and don’t cancel existing credit cards in the six months before applying for a mortgage loan. Mortgage brokers are looking for consistency. Any time you apply for credit, it goes on your credit report. Avoid charging a large amount during that time and make every payment on time.
Put as much as you can toward a down payment. Twenty percent is a typical down payment, but put down more if possible. Why? The more you can pay now, the less you’ll owe your lender, and the lower your interest rate on the remaining debt will be. It can save you thousands of dollars.
While you are in the process of getting a mortgage loan, do not apply for any new credit cards. Every time your credit is checked, it puts a mark on your credit score. Too many of these will make it difficult for you if your credit is already a bit questionable.
Remember that your mortgage typically can’t cover your entire house payment. You need to put your own money up for the down payment in most situations. Check out your local laws regarding buying a home before you get a mortgage, so you don’t run afoul of regulations, leaving you homeless.
Know as much as you can about all fees related to a mortgage. Commission fees, closing costs, and other fees will be attached to the actual cost of the loan. You can negotiate a few of these with either the lender or the seller.
If you have a little bit more money to put down on a home, consider getting a conventional mortgage as opposed to an FHA mortgage. FHA mortgages have lower down payments but excessive fees that are added to the cost of the mortgage. Save up at least 5 percent in order to be eligible for an FHA loan.
If you have previously been a renter where maintenance was included in the rent, remember to include it in your budget calculations as a homeowner. A good rule of thumb is to dedicate one, two, or even three percent of the home’s market value annually towards maintenance. This should be enough to keep the home up over time.
You likely know you should compare at least three lenders in shopping around. Don’t hide this fact from each lender when doing your shopping around. They know you’re shopping around. Be forthright in other offers to sweeten the deals any individual lenders give you. Play them against each other to see who really wants your business.
Look into credit unions. There are many options for obtaining financing, and credit unions have their strengths. Often credit unions will hold mortgages in their private portfolio. Banks and other financial institutions routinely sell mortgages to other holding companies. This could result in your loan changing hands multiple times over its lifetime.
Keep your credit score in good shape by always paying your bills on time. Avoid negative reporting on your score by staying current on all your obligations, even your utility bills. Do take out credit cards at department stores even though you get a discount. You can build a good credit rating by using cards and paying them off every month.
Before you even start looking at a new home to buy, try to get pre-approved for a home. This will give you confidence when looking for a new home and let you know what your budget is. It will also save you from choosing a home only to find out you cannot secure a large enough loan to purchase it.
Choosing the mortgage that best works with your finances are totally up to you. If you partner your excitement with your knowledge about mortgages, then you’re going to balance out yourself and take the necessary time to make a good decision. Failing at this step will leave you with an undesirable mortgage, so use what you have learned.