“Cinco de Mortgage: 5 Tips for Getting the Best Mortgage"
Source: Informa Research Services
(05/05/2010Finding the best mortgage is easier than most expect, but the process can be intimidating and confusing at times. However, by following a few simple guidelines, you can find the best financing option for your situation. Here are five tips for potential homebuyers:
1. Maintain good credit.
A high credit score is still one of the biggest factors in determining whether or not you are qualified for a loan. Since your credit score is derived from various factors such as your credit and payment history, it is important to keep making payments on outstanding debt to keep your score high. Also, restricting the number of loans you apply for can also help your credit score since each hard inquiry can lower your score.
2. Shop around.
Use online rate tables to compare various loan scenarios and find the best one currently available in your area. Since these online rate tables gather loan information from various lenders and compares them on a single table, you can be sure you are getting the best deal available.
3. Compare APR instead of rate.
Annual percentage rate (APR) is the cost of a loan expressed as a yearly rate, which includes the interest rate, points, broker fees, insurance, and any other related fees a borrower would pay. This figure can give you a more complete picture of the loan because it includes all costs, as opposed to just the interest rate attached to the loan.
4. Watch out for the classic bait-and-switch.
Lenders may advertise low interest rates or deals that involve no money down or no closing costs, but you should inquire about the requirements necessary to be eligible for these offers. Sometimes, upon informing a customer that they do not qualify for the advertised deal, lenders will try to sell them another loan. If you feel uncomfortable with what a lender is trying to sell you, you should feel free to ask questions or look elsewhere for financing.
5. Educate yourself.
The best safeguard is to stay educated about mortgages. Knowing general industry terms and regulations should help you make the best decision and feel more comfortable with the home loan process. Making an informed decision begins, of course, with being well-informed.
