Mortgage Tip #1: Boost Your Credit Score
The first step to finding your ideal mortgage match is looking in the mirror. How does your FICO credit score look? If your score is lower than 600, you may have a tough time qualifying for a mortgage.
To prepare and present yourself as the ideal candidate for a mortgage loan, get your credit score in shape. Take steps to consolidate any debts you may owe to improve your debt-to-income (DTI) ratio. Make sure you show up on-time with monthly payments—punctuality is attractive and will boost your credit score.
Many mobile banking apps allow consumers to sign up for monthly credit reports, which will enable you to keep a close eye on your score. If your bank doesn’t offer this service, there are plenty of other services that do—for free. Equifax, Experian, and TransUnion are each required to provide you with a free copy of your report once a year.
A low credit score will characterize you as a risk for most mortgage lenders.
Being portrayed as risky means that you’ll have slim pickings when it comes to choosing your mortgage-made-in-heaven. You’ll also have to pick up the tab by paying higher interest rates.
Make responsible financial decisions to boost your credit score. The higher your score, the more leverage you have to negotiate better rates and terms.
Mortgage Tip #2: Educate Yourself on the Market
The mortgage market offers plenty of different loan types so borrowers like you can find options that match your lifestyle.
Adjustable Rate Mortgages
Adjustable-rate mortgages offer attractive initial interest rates, which are typically lower than that of a fixed-rate mortgage. After the introductory period, interest rates will adjust each year following for the life of the loan. These loans are ideal for home purchases and refinances.
Fixed-rate mortgages offer stability and predictable expenses throughout the term of the loan. Fixed-rate mortgages protect you from the potential of rising rates. This type of mortgage is often attractive to borrowers who will be staying in their homes for long periods.
FHA loans may work well for borrowers looking to make small down payments on their homes. These may be a perfect fit for first-time homebuyers. Often, FHA loans allow cash out options for home improvement and repair projects, and with these loans, borrowers can choose from fixed and adjustable rates.
Jumbo and Super Jumbo Mortgages
A jumbo or super jumbo mortgage is ideal for borrowers looking to purchase high-priced properties. These loans are great for purchase and refinance, and they often allow borrowers to choose from fixed and adjustable-rate options. With jumbo mortgages, borrowers can typically cash out for home improvement and other projects.
VA Home Loans
Eligible for VA home loans, active duty and veteran military service members or spouses can enjoy low down payments, wide ranges for rates, terms, and cost, and flexible closing options.
Mortgage Tip #3: Ask Questions
Get to know your mortgage! After you research different loan options, think about other questions you might have like:
- How long will the entire process take, from application to appraisal and closing?
- What lender fees might I be responsible for?
- What are the down payment requirements I will need to comply with?
After all, loans of any kind are a commitment, so you may want to review your loan estimate (LE) carefully. This document, provided to you by your loan officer or lender, will include estimated interest rates, monthly expenses, and closing costs. Review this document often so you can grasp how much you’ll be responsible for.
Finding the best mortgage loan for your budget and lifestyle may require a fair amount of research. But nothing good comes without effort. Putting in the work will equip you with your mortgage match and future home in no time.