The home buying experience can be both exciting and stressful at the same time. On one hand you’re searching for your dream property, a place where you might spend a number of years raising your family and enjoying the community around you. And on the other hand, you have to deal with the mortgage process and making sure you understand fully what you’re getting into so you don’t make any bad decisions.
Our brokers get asked a lot of questions about this topic and so we put together a simple list of 5 mortgage lending tips that may help a homebuyer feel less stressed out about what could potentially be the most important purchase of their life.
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Know your credit score and history
Before you start your mortgage application, review your credit score and history to see if there is anything negative that could cause your loan to not be approved. Your credit score is one of the first things lenders look at, and if it’s not high enough, you may be automatically rejected. Your bank or another resource might offer free basic reports, which will let you know if there are any major issues like possible credit fraud that could really hammer your score.
If you’ve been paying your bills on time, have minimal debt, and there are no other score lowering factors in your history, then this will be an easy glance over before focusing on other aspects of your mortgage. But if you’re just on the edge of a decent score because of a few minor issues, knowing how to clean up those negatives factors will help get your mortgage approval back on track.
Save money
The more money you can save for a down payment, fees, and any other expenses that come with buying a home, the more likely you are to get an approval for the mortgage you want. Zero-down mortgages are hard to find and not always the smartest way to purchase your dream home. Lenders will usually set their own requirements for what percentage you have to put down, but if you shoot for 20%, you’ll not have to deal with PMI (Private Mortgage Insurance) which adds a premium to your payment every month until there is at least that much equity invested into the property. The rules change if you’re approved for a VA loan, available to verterans, and it’s best to discuss all of your options with your lender.
Avoid new debt
If you’ve started planning on buying a home in the near future, it’s best you avoid adding any new debt to your household and continue to pay off any debt that you may have. The less you owe to creditors the better. A low debt-to-income percentage will yield much better results when it comes to approving your mortgage and remove one less stress factor during the home buying process.
Get pre-approved and lock in your interest rate
When you’re pre-approved for a loan, you can start shopping with a little peace of mind. With interest rates occasionally fluctuating, it can be easy to feel like you have to rush your decision in order to get the best rate possible. There are lender programs now though that allow you to lock in the current interest rate for 90 days and even reduce your rate before you close if the interest rates drop during that period.
Ask questions
Buying a home, for most people, is the most expensive purchase they’ve ever made. It also can be one of the most intimidating processes that comes with a lot of fine print. Once you’ve made the decision to start working towards getting approved for a mortgage, start educating yourself on anything that may be confusing by asking real estate experts and other homebuyers who have a lot more experience with the home buying process. There is nothing worse than finding out about an unexpected fee after signing the dotted line or knowing you could’ve done something different that would’ve saved you a lot of time and stress.
The real estate sales associate you choose will be one of the best resources you can use to make your home buying experience go smoothly. CSIR has over 200 of the best brokers who are extremely knowledgeable in everything from what neighborhoods are best for what you’re looking for to understanding all of the paperwork and fees that come with a mortgage. They’ll help you understand the fine print, compare lenders, and find answers to any questions that you might have while helping you find your perfect house.
To find out more about how you can lock in your interest rate and get any other questions answered while you look for your dream home, contact one of our preferred lenders.