A home is one significant asset. However, acquiring one can prove to be an intimidating task, especially for those who don’t have enough funds to buy one in the first place. Thanks to the different institutions who offer mortgage plans, you can now achieve a home purchase at a more affordable rate.
One only needs to know the basics of mortgages. But don’t settle for a home loan just because of its incredibly low-interest rates. While it does make sense to find a mortgage program you can qualify for with the lowest rates, it would be best to shop around and take the following steps.
Check your credit report and aim to improve your score
Before you go shopping for mortgage rates, get a copy of your credit report first and check for errors or discrepancies that need to be fixed. Also, you’ll need a FICO score of at least 580 to qualify for a mortgage loan. Do what it takes to improve your score to get the best deals.
Good Read: How the FICO Credit Score Is Composed
Consider all mortgage options
Determine a projected amount you wish to borrow, the mortgage type you prefer and how long you plan on paying the loan. Know that mortgage loans fall into two types – Conventional Loans and Government-Backed Loans and two basic categories which are the Fixed-Rate Mortgage and Adjustable-Rate Mortgage. Make sure to compare the pros and cons before choosing one.
Shop for lenders
Make sure to ask for recommendations and to do thorough research when shopping for lenders. It is also a great idea to work with a mortgage broker. They have lots connections, knowledge and skills to help you find the right Mortgage Lender Dallas that can offer the best deals that match your situation.
Add all costs and check the GFE
Just because mortgage lenders told you an estimated total cost doesn’t mean that is all you’ll have to worry about. From the fees you need to pay when you apply for a loan like appraisal fees to down payments, monthly mortgages payments, interest fees to closing. The GFE or Good Fate Estimate will include all amount due at closing. Knowing what the GFE is and expecting a larger amount will give you an idea on the overall cost of a mortgage.
Negotiate with lenders
Usually, lenders will give you a loan estimate three business days after you submit your application. After making comparisons with the different lenders, the next step would be to negotiate. You can bargain for the rates after asking for all the rates and fees. Compare with what other lenders offer to you and try to see if they can match the terms offered to you by other lenders.
After deciding on a mortgage lender, it’s time to get pre-approved. Finish the application process and make sure to ask for a pre-approval letter. Such a letter are formal offers made by a lender. Not meeting all full terms agreed upon can result to canceled or revoked pre-approval letter.
Now that you know how much you can afford and how much you can borrow from a lender, find a house that you like. Make sure it meets your needs, and you can actually afford it.
Lock in your rate
Once approved and you found a mortgage program you want, lock in your rate to prevent it from changing before the closing day. However, you can choose to make it “float,” but you risk your interest rate from increasing or decreasing.