Mortgages - Getting a Good Mortgage
Check Up on Your Credit Rating
Buying a home is an exciting and often nerve-wracking process. Before you find the home of your dreams, it’s important to secure a good mortgage deal so you can avoid paying unnecessary and hidden fees. Negotiating the confusing world of mortgages is challenging, but once you’re armed with the knowledge you need to get a good rate, you’ll feel more comfortable dealing with banks and mortgage professionals.
It’s important to know your credit rating before you begin shopping for a good mortgage deal. A credit score over 700 is ideal for securing a mortgage with low interest rates and fees. The lower your credit rating, or your combined rating if you have a spouse, the higher the interest rates you will have to pay. You are entitled to obtain a free copy of your credit rating once per year. Once you receive yours, look it over to determine your credit rating. A few minor problems won’t prevent you from securing a great mortgage, but they can increase your interest rates.
Determine How Much of a House You Can Afford
Consult a mortgage professional to determine an estimate of exactly what you can afford. There are also quite a few online mortgage calculators that you can use to determine this on your own. Once you’ve totaled your household expenses, which should never exceed more than 30% of your net income, it’s a good idea to get pre-approved for a mortgage so you’ll know the precise price range of home you can afford before you start to look at houses. This will save you time and allow you to focus your search on your personal price-point. Keep in mind, though, that once you’ve found your house, you are not required to stick with a mortgage offered by the company that pre-approved you. Continue shopping around lending institutions to find the best deal. You should also review your personal savings to determine how much money you can devote to a down payment and to closing costs as well.
Research Rates and Learn to Negotiate
Discover the interest rates in your area, so you can avoid being swindled by a broker charging you added fees by claiming they are part of the interest rate. Also, try to keep abreast of the local market fluctuations. Waiting just a couple of months may make a big difference in the mortgage deal you’re able to secure.
Mortgage lenders will typically provide you with a variety of mortgage types with differing rates. It’s important to realize that the lowest rate offered doesn’t always provide the best deal for your personal situation. Inquire about the total cost of each loan over its lifespan. A lower upfront rate often ends up costing you quite a bit more than a higher upfront rate over the life of your loan. Finally, don’t be afraid to negotiate with mortgage lenders. Most banks and brokers will negotiate their fees with you, but it is up to you to ask. If you’re willing to tell your bank how much you’re ready to pay in fees, they may work with you to obtain a great mortgage deal.