6 Important Tips When Financing a New Home

6 Important Tips When Financing a New HomeChoosing a mortgage can be a daunting task. You should view it as a methodical, step-by-step process. Planning is critical. Some of the most important tips in this process will be discussed.

It is a good idea to got through this process of shopping for a mortgage before looking for a new home. You need to know how much you can afford. All too often people go home shopping and get disappointed when they suddenly realize that they don’t qualify for a loan needed to get that dream house they just fell in love with.

Also, before you start the mortgage loan process, it’s helpful if you are able to nail down the location of where you want to live and an approximate price range. The lender can then use this information to determine property taxes on a proposed escrow to give you a more accurate quote.

Below are some guidelines for shopping for a mortgage:

1. Credit-look into this first as it will affect everything else. Be aware of your credit rating and credit history.

2. Shop Around-there are a variety of sources than many don’t realize. Different sources can offer very different options for you. So if one place doesn’t fit your needs, move on to another. Some possible mortgage sources could include:

  • mortgage brokers
  • mortgage lenders
  • banks
  • credit unions
  • local and state mortgage programs
  • community service
  • housing agency mortgages
  • mortgage assistance programs

3. Obtain All Loan Cost Information-this will aid in comparing it against other loans. Ask questions-you want to know the meaning of each fee, so you can possibly negotiate later. Some of the more important pieces of information you want to obtain include:

  • cost of points
  • broker fees
  • origination fees
  • underwriting fees
  • administrative costs
  • mortgage insurance yield spread premiums
  • commissions
  • escrow
  • closing costs

4. Check Loan Terms for a Variety of Loans-know the down payment and term of the loan.

5. Negotiate-be aggressive and ask the lender to:

  • waive or reduce one of the fees
  • lower the rate
  • agree to fewer points

6. Consider a Lock-In from the Lender or Broker-by getting a written loan commitment that guarantee the terms and costs you’ve locked. Make sure it includes:

  • the rate
  • the period the lock-in lasts
  • the number of points to be paid
  • as well as a lock on as many other costs and terms as possible

I hope this has given you some insight to the mortgage process. Just remember, take your time, shop around, be as detailed as possible, ask questions, negotiate and get it in writing.

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Best Regards,
6 Important Tips When Financing a New Home
6 Important Tips When Financing a New Home

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