Expert Tips When Shopping Around for a Mortgage When it’s time for you to obtain a mortgage loan, you should treat it like anything else and shop around for the best possible rates. After all, you’ll be stuck with that mortgage for 15, 20, or even 30 years, so it helps to find a lender that best suits your needs. Here are five tips for getting the best possible deal. #1 – Fix Your Credit The better your credit, the better your rates – and the larger the loan you can get. Keep that in mind and run your credit report yourself long before you ever set out to get preapproved for a mortgage. Make sure you take care of any delinquencies, ensure that your credit line utilization is somewhere between 25% and 35%, and keep a close eye on your debt-to-income ratio, which is very important when it comes to getting a great interest rate on your mortgage. #2 – Understand How Mortgages Work Understanding how mortgages, lending, requirements, and other things work can carry you a long way when it comes to actually obtaining a home loan. For example, you should learn all about the differences between fixed and variable rates. You should also carefully examine the pros and cons of 15-year and 30-year mortgages so you’ll know what you can afford and what will save you money in the end. For most buyers, it’s all about finding the appropriate balance. #3 – Compare, Compare, Compare All too often, borrowers will walk into the very same banks where they’ve had checking and savings accounts for a decade, sit down with a loan officer for a preapproval, and leave it at that. Failing to compare rates with multiple lenders can cause you to miss out on lower interest rates and higher loan amounts. It’s always best to shop around to find the lender that works best for you, so make sure you take the time to do so. #4 – Don’t Be Afraid to Ask Questions Sometimes, people feel so confused by the terminology they see in their preapproval estimates that they simply take everything at face value. If you see something on your GFE (Good Faith Estimate) that you do not understand, make sure you bring it up with the lender for an explanation. This way, you’ll know exactly what you should expect if you decide to go ahead and process the mortgage application with them. #5 – Pay Attention to Offers and Preapprovals
Finally, it’s important to remember that mortgage payments aren’t the only costs associated with homeownership. In order to conform with lending laws and guidelines, your lender is required by law to provide you with information about all of the charges you would incur if you were to sign the loan agreement with them. Be sure to look it over carefully, and don’t hesitate to have your lawyer look it over, too. After all, this is likely going to be the largest purchase you’ll ever make, and you want to make sure you’ve covered all your bases. When shopping for a mortgage, you should follow the tips above to give yourself the best possible chance to find the rates and loan amounts that work for you. You’d never buy the first car you see from the first dealership you visit, and you should treat your home the same way.