Buying a new home is an overwhelming decision. There are hundreds of things to evaluate, your financial stability being on the top of the list. Spending for a real estate property requires substantial amount of investment which is why most people turn to mortgage programs to fund their purchase.
Looking for an appropriate home loan is more than comparison shopping. There are numerous other factors such as interest rates, repayment tenure, processing charges, etc. that have to be taken into account before making a final call.
Getting the right mortgage from a reliable lending company can save you thousands of dollars over the life of the loan. Here are some amazing tips to help you get the best deal on your mortgage –
Check your Credit Score
Before you start your home shopping, you need to find out whether you even qualify for one. Mortgage lending is mainly based on your FICO credit score which means that if you don’t make up for the desired numbers, you will not qualify for the loan.
A good credit score is the numeric expression of a person’s creditworthiness and is extremely essential to avail the best mortgage rates.
Ensure Income Stability
Mortgage lenders are happy to lend money to candidates that have been into steady employment and are earning stable income from last two years. An unemployed person or one with declining earnings loses his/her credibility and doesn’t easily get loan approval.
The lending companies and institutions are strict with self-employed candidates too. A businessman is required to present his proof of income along with income tax returns for the past two years to start with the application procedure.
Look out for Mortgage Programs
Before you finally settle on a mortgage, you should find out if you qualify for any special lending programs. Many states extend help to first-time home buyers and some offer aid to repeated customers as well.
Thus, this mix of programs gives privileges like a favorable rate of interests and tax breaks to buyers.
Try to Pay Off 20% Down Payment
What most of the borrowers don’t realize is that paying a down payment of at least 20% of the purchase price of your home gets you the best mortgage rates on the table.
A loan with lesser down payment carries higher interest rate and risk. Moreover, it attracts private mortgage insurance becoming an additional burden to your monthly instalment.
Contact Multiple Lenders
It is a well-proven fact that the more you search, the more you save. Expert reports have concluded that comparing the rate of interests of two or more lenders help you in saving a good amount of money on the interest amount.
So, once you have positioned yourself for a fairly good mortgage rate, go out and compare what other banks, credit unions, and online lenders have got to offer you.