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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