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Home > Home Buying Tips > Do your Mortgage Homework when Buying a Home

Do your Mortgage Homework when Buying a Home


If you are a first time home buyer you might understand the important of researching the housing market and finding the right neighborhood. Many first time home buyers; however, fail to realize the importance of performing mortgage research.

The first step is to make sure that you begin early. Before you even begin to think about shopping around for a house you need to begin taking steps to assess your financial situation. Far too frequently many home buyers are surprised to discover their financial situation is not as rosy as they had imagined. This can mean higher interest rates and even the inability to qualify for a mortgage at all. By taking the time to understand exactly where you stand financially, you will have a better idea of how much home you can afford and how much you will need to be prepared to pay in mortgage fees to own that home.

Additionally, just as you would shop around for just the right home to meet your needs it is also important to shop around and find the right mortgage broker or lender to meet your financial needs as well.

When comparing mortgage lenders or brokers it is always important to compare interest rates, of course, but you must also make sure you are looking beyond rates to other fees you may be required to pay and the types of service you can expect to receive as well.

The most important factors for most home buyers when looking for a mortgage broker or lender are reliability, integrity and efficiency. Perhaps the best way to judge these qualities is to begin looking for mortgage lenders by asking friends and family members who they would recommend.

You can also check to see if the mortgage lender in question has had any complaints filed. Call the commissioner of banks for the state in which the mortgage lender operates and ask for the consumer affairs division. That office should be able to tell you how many complaints have been filed against the mortgage lender and in what time frame.

Obviously, it is also a good idea to ask for references from the lender as well, but not expect the lender to provide you with any names from which they might receive a negative reference. References can play a part in the role of choosing a mortgage lender but you should not base your entire decision on them.

It is also a good idea to ask your real estate agent for recommendations. While real estate agents in most states are prohibited from actually recommending only one mortgage lender, they can usually provide you with a list of mortgage lenders they feel are reliable.

Remember that it is always best to start shopping around for a mortgage lender at least several weeks before you plan to make an offer on a home. If you are new to the entire mortgage process and think you might have a lot of questions then it is best to start looking in months in advance.

Before you do that; however, always make sure you know where you stand financially. Take the time to request a copy of your credit score from all three national credit reporting bureaus. This will give you a clear idea of where you stand financially and can even give you an idea of what you will be able to realistically afford.

In addition, checking your credit report in advance will give you the opportunity to make sure there are no errors on your credit report. In the event you do find something erroneous on your credit report you will have time to have it taken care of before you begin looking for a mortgage lender.

Your next step is to make sure you have all of your paperwork in order. In most cases this means you will need a copy of your paystub, bank or stock statement, W-2 and driver's license.

It is also a good idea to make sure you have a clear idea of the types of mortgage loans which may be available to you. This will help you select the best type of mortgage loan for your situation.

Finally, always make sure that you get mortgage pre-approved before you actually begin shopping for a home. This will provide you with a stronger bargaining position in the event you run into a bidding war with other buyers. Home sellers generally will more seriously consider an offer from a buyer that has been pre-approved than one who has not.


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