Buying a house will probably be the biggest purchase you ever make. Financing a house is not the same as buying a couch, computer, or even a car. Chances are the mortgage you settle on will be with you for around 30 years.
Be a well-informed shopper going into the homebuying process with these mortgage tips.
1. Know Your Credit
Knowing what your credit is will allow you to decide if you’re ready to apply for a mortgage or what kind of rates you can expect.
If there’s something wrong with your credit, or you have poor credit, you don’t want to find out during the application process. Fortunately, you have the ability to download your credit report for free every year.
Prior to submitting your mortgage application, be sure to review your credit report. Look for any errors and get them fixed promptly.
2. Don’t Apply for Any New Credit
Because your credit is under scrutiny during the mortgage application process, you need to tread carefully with things that will impact your credit. This means you should not apply for a personal loan, credit card, or any other type of new credit.
3. Organize Your Files
A mortgage application will require you to provide a lot of verification documents. Create a file on your computer and save PDFs of the following:
- Recent pay stubs
- Bank statements
- Most recent tax return
4. Don’t Look for a New Job
Mortgage lenders like stability. If you’ve been at your current job for more than a year, it will be a great indicator of financial stability. Regardless of how long you’ve been at your present employer, now’s not the time to look for a new job.
5. Collect Gifts Early
If you have people helping you make your down payment, be sure to ask them for their gift before you apply for your mortgage. You want to be sure the deposit is cleared, plus the higher balances will look attractive to lenders.
6. Know Your Loan Options
If you don’t think you’ll be in your next home for 30+ years, you may not want to do the traditional fixed rate 30-year mortgage.
Hybrid loans are available for people who think they might sell within a few years. The hybrid loan provides a lower interest rate for a certain period before kicking into a traditional mortgage.
The danger of a hybrid loan is that plans can sometimes change, and this type of loan will end up being more costly if you do end up staying long-term.
7. Get Pre-Approved
You should shop around once you’re ready to pursue a mortgage and look to get pre-approved before starting the house-hunting process.
When looking at mortgage lenders, ask questions like:
- Are there any attorney’s fees?
- Are there document prep fees?
- Can they provide a breakdown of closing costs?
Aspire Can Help!
We take the stress out of the mortgage process by working with you every step of the way.
Our free, educational, interactive mortgage website allows you to:
- View sample rates
- Learn about the application process
- Find information about choosing the right mortgage for your needs
- Determine how much home you can afford with our financial calculators
- View insurance and property information
- Get in touch with a Real Estate Lending Consultant
- Pre-qualify for a mortgage loan
- Apply online 24/7
- And much more!