The purchase of a home is generally the largest expenditure you will make in your life. With mortgage rates at historic lows, lower home prices, and a large selection of homes to choose from, many more people are able to enter the home market. Whether you are looking at upgrading, investing in a rental, or are a first time home buyers there can be some confusion on some of the advice you may hear. With that Brent Wayne of MortgageLoan.com offers the following tips & tricks.
There are numerous mortgage products one can choose from, and borrowers can find great deals on homes and mortgage products if they know where and how to find them. Here are 8 tips to help you save money and make your home buying process easier
- Tip 1 – Ask a friend, family member or a Realtor for a referral for a reputable mortgage broker or lender
- Tip 2 – Check your credit report and clean up negative items before you apply for a mortgage so you can get better terms
- Tip 3 – Get pre-approved or pre-qualified to find out how much home you can afford before you start looking for homes
- Tip 4 – Educate yourself by comparison shopping to find the best rate and terms. Using a mortgage lender or broker saves you time and money because the mortgage broker can do all the leg work for you.
- Tip 5 – Don’t sign any mortgage documents until you are given a breakdown on costs associated with your mortgage and understand the terms of your loan. By law, mortgage brokers and lenders must give you a disclosure statement and good faith estimate of the costs of your loan.
- Tip 6 – Don’t assume that all mortgage products are the same. There are teaser rate mortgages that offer you low initial interest rates and payments. However, before you know it, your monthly mortgage payment has doubled or tripled. Avoid interest only mortgage products as well. Choosing the wrong mortgage could put you at risk of losing your home. Stick with a traditional 30 year fixed rate mortgage if you plan to keep your home for more than five years, or a variable rate mortgage if you plan on keeping the home for a short period of time.
- Tip 7 – Don’t go out and make any expensive purchases like buying a new car or increase your credit card debt while you are in the process of obtaining a home mortgage, as it could hurt your chances of being approved for your loan.
- Tip 8 – Don’t borrow more than you can afford even if you qualify for more.
Tricks to save money long term:
- Make sure you improve your credit score before applying for a home loan if your credit history is not great. Yes requires patience as it can take several years to raise your score. Always pay your bills and make your loan payments on time. Using credit cards and paying them off every month gives you a higher rating. Use them wisely, and only charge what you know you can pay for each month.
- Consider working with a mortgage broker that works with many lenders, and are familiar with the various mortgage products to help you choose the best product suited for your financial needs.
- To purchase or refinance an existing property that needs some rehab, consider obtaining an affordable FHA 203k mortgage
- Buying an energy efficient home or making energy saving improvements to an existing home allows qualified borrowers the opportunity to obtain an Energy Efficient Mortgage (EEM) for a new ENERGY STAR home or to refinance to an Energy Improvement Mortgage (EIM) on their current home. This can allow one to qualify for a larger cost efficient home purchase or refinance because the home’s value is readjusted to recognize the energy savings features.
In closing I would like to thank Brent Wayne once again for this piece. As one that has used the typical big banks & mortgage brokers in the past, I generally prefer using a broker do to all the options they have available.