12 Tips On Obtaining A Mortgage

12 Tips on Obtaining a Mortgage:

To obtain a mortgage in today’s market, mortgage brokers and lenders want to know everything about you and you should know as much about them as possible. The three main things mortgage and lenders want to know about you are the following: 

Residential History – How good you are at making your payments were you currently live and for stability.

Employment History – Your income is based on your employment, and this determines how much you can afford. Most mortgage brokers/ lenders will average your income over a two year period.

Credit History - Mortgage brokers/lenders want to know that you can make your payments on time. By not paying any bill on time shows a neglect to pay. This can hinder you from acquiring the amount of finance that you need or at least the Loan to Value amount. This means how much they will loan versus how much the property is worth.

Now that you know what they are looking for, it is time to arm yourself with the knowledge that they will acquire from you before they get it. 

Here are some tips that can help you obtain a mortgage with less hassle, and at a lower overall cost:

1. Make a budget. Determine how large a mortgage you can afford and find out all the costs involved.  Based on your income and any long term debt, know the maximum payments you can be certain of making comfortably. Don’t forget that you may have to pay closing costs. Many people forget to include these costs into their plans.

2. Here are some budgeting calculators that can help you make an accurate plan: http://www.betterbudgeting.com/budgetingtools.htm

3. Get quotes from various lenders. Different lenders may quote you different prices, so you should contact several lenders to make sure you're getting the best price. Once you know what each lender has to offer, negotiate for the best deal that you can. The quote should include the rate that you have agreed upon and the period the quote lasts. You need to obtain a written quote from the lender or broker after you have negotiated and agreed to the terms.

4. You can also get a mortgage through a mortgage broker. A broker will find a lender for you. A broker's access to several lenders can mean a better selection of loan products which you can choose from.

5. There is a wide variety of mortgage types and rates, so it is best to educate yourself. If you know the meaning of the mortgage “lingo”, the types of loans available and what the current rates are, you will be in a much better position to negotiate your home loan. 

6. Always ask each lender and broker for a list of their current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.

7. Locate a mortgage calculator online that allows you to enter your income and it will tell you how much mortgage you can afford. Here is one site that has several helpful calculators: http://www.mortgage-calc.com/  

8. When applying for a home loan or mortgage, be prepared for many fees, such as underwriting fees, broker fees and closing costs. Every lender or broker should be able to give you an estimate of their fees. It is important to keep in mind that many of these fees are negotiable. Some fees are paid when you apply for a mortgage and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. "No cost" loans are sometimes available, but involve paying higher rates.

9. Gather and organize all of your required documentation. The required documentation you will need to provide before your mortgage is approved will include, but is not limited to, the following:  updated credit report, IRS returns for past years, W-2’s, proof of current salary, assets, debt, and records regarding child support or alimony. It is very important that you have an updated credit report prior to applying for any type of loan.

10. Keep in mind that you can apply for 3 or 4 loans, but don’t apply for more than that because each application requires a credit check which can lower your credit score.

11. The goal is to pay off your home mortgage in the least amount of time possible while allowing enough money to live comfortably. For example a 15 year loan can save tens of thousands of dollars in interest payments.

12. Be sure to ask your lender for information on various government programs that assist those who qualify with their down payment. Most of these programs consist of basically a low interest loan that you will repay along with your mortgage payments. There are also government programs that will not require you to repay any down payment assistance you may receive.

We hope these tips have helped to inform you on the road to making your mortgage experience easier and less costly.