If you are first-time home buyers, it is very important for you to choose the right mortgage. Here are some tips can help you find a mortgage that suits you as easily as possible.
Tip #1-Start saving prepayment
Depending on your lender and the type of loan you choose, the required down payment may range from 2.25% to 20% of the house purchase price. Setting a monthly budget will help you set aside enough money to cover the down payment.
After determining the budget support, consider automatically depositing the salary or the money in the bank account into a savings account to make it easier and more convenient to withdraw money each month. An account such as Discover Bank's AutoSavers program can help you start saving immediately.
If you have trouble getting a large deposit, you should seek an FHA loan, which will help homebuyers who can only pay a small deposit.
Tip #2-check your credit score
Having a good credit rating can enable you to attract the most favorable housing loans. Therefore, it is best to obtain a copy of your credit report before starting the home buying process. You will see the credit status of potential lenders and then take steps to improve credit scores if necessary.
Tip #3-Organize financial documents
When applying for a mortgage, you need to provide some financial documents to the lender. Organizing these documents will help speed up the processing of loan applications. At a minimum, you should be prepared to provide the last two payslips, the most recent W-2, the most recent two years of tax returns, and the current bank and brokerage statements.
Tip #4- Use a mortgage calculator
The mortgage calculator is an excellent tool to help you determine the number of affordable homes. They are very easy to use and can show your monthly mortgage amount under different price, prepayment and interest rate schemes. Explore our various convenient mortgage calculators.
Tip #5-learn how to compare transactions
Not all mortgages are equal. Even if the loan has the same interest rate, there may be differences in points and fees, making one offer more expensive than another. It is important to understand all the factors that determine the mortgage price so that you can compare quotes accurately. You can click here to learn more about the components of mortgage pricing.
Tip #6-Start tracking interest rates
Interest rate will be one of the main factors in determining the cost of mortgage. Mortgage rates change almost every day, which helps to understand the direction of mortgage loans.
Many real estate agents expect you to qualify for a loan before you start working with you. The mortgage prequalification process is very simple and usually only requires financial information, such as your income and your savings and investment. After passing the prequalification, you will have a better understanding of how much money you can borrow and the range of affordable housing prices.
Tip #8-Learn about different loan methods
Maybe your parents have a 30-year fixed-rate loan. Maybe your best friend has a loan with an adjustable interest rate. This does not mean that these loans are suitable for you. Some people may like the predictability of fixed-rate loans, while others may prefer the lower upfront payment of adjustable-rate loans. Every home buyer has his own financial situation, so it is important to understand which type of loan best suits your needs.