How To Get The Best Mortgage Rates And Terms?

Getting a mortgage has always been a big deal, but since 2017, it has even become tougher to get one due to the frequent and ongoing interest rate increases and the 2018 stress tests to which homebuyers are still getting used to. Be it as it may, most homebuyers cannot find a way around the mortgage when shopping for a home, so the best thing they can do is to thoroughly prepare for it to get the best possible deal there is on the market. To get the best rates and terms, homebuyers have to be early birds and start gathering info and saving money early on (way before they decide on a lender). Here are several tips on working your way up to the best rates and terms with a little bit of prep work.

Before Doing Anything, Check Your Credit Score

The most desirable mortgage applicants are the ones who carry a slight risk which translates into steady income and excellent financial management skills. The lender will undoubtedly pull your credit score report to see how you handle your finances. Do you have any credit card debt, and how serious is it? If you do, do you pay it back regularly? Do you pay your bills on time? These are just some of the factors that will play a huge role.

Before you apply, make sure to check your credit score yourself to see where you stand, and if you are not satisfied with what you know, you can work on improving your credit score first before going after a mortgage.

Your Down Payment Should Be More Than The Bare Minimum

The lender will “judge” you by the amount you put down for the down payment, and a lower loan-to-value ratio is always better, so make sure to have something to show for if you want the best rates. The more you put down, the lower the risk for the lender. Save on your own and/or have family help you, but try to exceed the 5% minimum for the down payment.

Shop For A Mortgage Like You Shop For A Home

Looking for a home means visiting several, sometimes even dozens of homes before deciding which one to buy. Do the same thing when you start looking for a mortgage lender. We are sure your local lender is great, but it won’t hurt to explore other options and get a sense of what deals are good and which are not. A frequent mistake homebuyers make is focusing their search just on the lowest interest rate, often neglecting other costs, fees or the lender’s policy (which does not necessarily be convenient for the homebuyer). It is so important to focus on the whole package instead of just different aspects. Make sure to inquire about pre-payment privileges (are lump sum payments allowed), portability (can you move your mortgage with you), penalties (what’s the procedure if you break your mortgage), processing and other fees (can often be also too high if the interest rate is too low). As long as you carefully study and compare the options in the market, there is no need to worry. You will quickly understand how to sort out the best mortgage options for you that fit your needs perfectly.

As we can see, to get the best mortgage rates and terms, it all comes down to the basics and the effort to prepare in advance (by working on the credit score and down payment savings) and familiarize yourself with the mortgage lending procedures to understand how it works and act accordingly.

For more tips and tricks on mortgages, feel free to call me.