There are certain things that you need to keep in mind if you want to get the best mortgage deals.
- Get your credit in order: Lenders will look at your credit score when deciding what interest rate to charge. So it is important that you maintain a high score and remove any delinquencies before you commit to any mortgage deal. Also, pay off collections and credit card balances before applying for a loan. And don't forget to take a look at your budget to make sure you can afford the monthly payment.
- While filing a loan application, be transparent: Take your time to carefully fill out the loan application as accurately as possible. Don't hide credit problems and don't fudge information about income or assets. Trying to hide credit problems or holding back requested documents can work against you for you might lose some of best mortgage deals. Your whole loan process might get delayed or even stopped as the lender always wants to make sure the borrower has the capacity to repay the debt. And if you are earning overtime pay, do provide documentation for that extra income even if you won't be using those funds for the home purchase.
- A big down payment helps: If you make a large down payment, you can attract more lenders. Most loan programs allow contributions from family members or friends for down payment money but they typically require such contributions to be accompanied by a gift letter asserting you won't have to repay the money. This works well to strike good mortgage deals.
- Repayment Terms: Choose between a fixed interest rate (in this interest rate will not change throughout the loan period) and an adjustable rate (where the rate is low for the first five to seven years, and then adjusts to the average interest rate every year after your fixed term ends). But don't focus solely on getting the lowest interest rate. Evaluate your overall budget, monthly payments and fees. A home loan is about getting the right mortgage with no surprises so that you can be a successful homeowner. You should calculate your own debt-to-income ratio, look at the full cost of homeownership, and determine how much you can comfortably afford to spend each month. Also, look at the discount points, origination fees, underwriting fees and document preparation fees when comparing loans. You also need to understand how your loan works, especially if it has an adjustable rate. With a fixed mortgage however, you know that whatever happens to interest rates, your monthly payments will stay the same for the agreed period.
- Work with a lender you trust: Along with the right loan and the interest rate, it is also important that you choose a lender whom you can trust. Working with a trusted lender can save you many headaches in the long run. Make sure you check out your lender's mortgage lender reviews to see what real clients are saying about the company. This is an important pre-requisite for a good mortgage deal.
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