Savvy Techniques for Finding the Cheapest Mortgage Loans
As the real estate market continues to suffer from the effects of the
bust, the number of incentives to encourage buyers to make the move
toward purchasing is increasing. At the national level, home prices have
dropped by more than 30% in the last three years, providing little
before seen values for home buyers. The tax credit for qualified first
time home buyers, amounting to $8,000, is yet one more incentive for
home buyers to go ahead and make a purchase. The mortgage market
provides even more encouragement as mortgage rates drop to the lowest
levels ever. Even so, if you are considering shopping for a mortgage now
and purchasing a home, home buyers may still have some questions about
how to find the best possible deals. Read on to make sure you are
prepared to sort through all of the possibilities and locate the
cheapest mortgage loans available.
First, it can always be helpful to make sure that you understand the
trends of the mortgage market. Mortgages rarely remain static. Even
within a few weeks, mortgage rates can vacillate quite a bit. Never
assume that just because mortgage rates were at a particular percent a
month ago that this trend will remain the same or continue. Take the
time to find out exactly what mortgage rates are when you are planning
to buy as well as how they are predicted to perform in the coming
months.
Locking in your mortgage rate can make a lot of sense in certain
situations, particularly if you are fairly certain you are going to buy
a home in the immediate future, your employment prospects are good and
you think you are going to live in the property for at least the next
three years. If that is the case, locking in the low rates of today
rather than sitting back and hoping they will drop even lower, could be
your best bet.
It is always important to get familiar
with the criteria for qualifying for a home mortgage. There is no doubt
that lending standards have tightened across the board as a result of
the increasing number of delinquencies. Despite the attractive mortgage
rates that are currently floating about, you will only be able to
qualify if you are able to meet the higher credit profiles. For the most
part, this means that you should have a FICO score of at least 720 and
be able to provide a minimum down payment of 3.5%. Furthermore, you must
be able to provide documentation of your income verification.
If you are not able to currently meet these requirements, there is no
need to panic, but you do need to perform some work in order to improve
your credit profile. The first step that should be taken is to work at
reducing your debt load. Pay down your credit cards and student loans if
you have them. Face the reality that you will probably need to put off
purchasing a home for at least a couple months. This is also a good time
to save up for your down payment. Review your credit reports from all
three credit reporting bureaus and make sure there are no mistakes. You are
entitled to receive a free copy of your credit
report from each of the three bureaus once every twelve months.
Never underestimate the power of shopping around, even for a mortgage.
Rates and fees can and do vary and you will have the best chance of
getting the cheapest mortgage possible if you do take the time to do
some research.
Finally, make sure that you are patient and prepared. Many lenders have
been absolutely inundated with applications following the sudden drop in
mortgage rates. As a result, you need to be prepared for the fact that
it is going to take some time for lenders to make their way through
those applications, especially if they are short handed. The one thing
that you can do to speed along the process is to have all of your paperwork gathered
before you even speak with a lender, this will help you
to avoid delays and smooth the process when you do get your turn.
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