Finding a good mortgage deal for a home loan is a little trickier now than it was ever before. With the current economic conditions and the great recession, getting the best deal can be harder than you thought. The exacting financial background checks, requirement of a high credit score and having to pass through stricter tests have made great mortgage rates extremely tough to get. However giving up on getting a good deal isn’t necessary and by keeping few tips from the financial experts in mind you can grab a good enough deal. Here are some tips.
The first thing that any lender will observe is the credit score of the buyer and it needs to be real good if you want the best mortgage deal. If you happen to have that, the lender will be interested in offering you great deals but having flaws in the credit score can hold him back. Request a credit report and check if it is accurate or has got frailty in it. If you find some flaws then get them corrected so you can offer a clean credit score.
While declaring one’s financials to the lender, people tend to ignore the hard assets and focus primarily on the income generating ones as only they seem to be important at the moment. But a bank needs a bigger picture of your financial condition to see how capable you are of paying and even though some of your assets are non-income producing they can be advantageous while searching for a good mortgage deal. Disclosing all the assets and income will encourage the lender in providing you with the best possible deal. For example, documentation for an overtime pay or a bonus shall also be made available to the bank no matter how unimportant it seems.
As the financial experts suggest that all the assets shall be disclosed in front of the lender, maintaining a transparency in the application process helps a great deal in getting you good mortgage rates. If your credit score contains a negative element, like a credit problem, then hiding it won’t help and will only delay the approval process or there won’t be any approval at all. Instead one shall present all the requested documents even if they happen to have uncorrectable flaws. Fudging information about income or financials shall be avoided in all conditions.
Making a big down payment highly affects the mortgage rate since the interest rates vary according to the loan-to-value ratio. And if the down payment you make is big enough to interest the lender, you will most likely get the best mortgage deals. Many loan programs even allow contributions from your friends and family in order to make the down payment big. If you can arrange resources through your personal relations then use it to get a lesser interest rate and a better deal. However for many lenders, the contributions made by your friends or family need to co-occur with a gift letter that will assert you won’t have to repay the money.
A good mortgage deal most certainly doesn’t mean only looking for the lowest interest rates. A lot of other factors have to be observed as closely before finalising a deal. The overall budget, monthly instalments and hidden costs (if any) need to be checked carefully. Choose a deal not just because it offers the lowest interest rate than you are getting anywhere else but you also must be comfortable with the amount that shall be paid every month. Calculate your own debt-to-income ratio and know clearly about the overall cost you are entitled to for the homeownership. The overall cost typically includes elements like initiation fees, documentation fees and underwriting fees. Ignoring such expenditures can prove being a blunder mistake for your financial decision. Also look for the discount points and carefully focus on understanding how your loan actually works. Loans with adjustable rates which change after two or three years can be especially tricky and every aspect shall be learnt about them before applying.
When you are in the market looking for a good mortgage deal you are obviously going to look at more than one lender but how to do it smartly? Get a referral from a trusted source and contact the lender to gain maximum information about different loan programs available and all the terms and conditions applied with them. Once you have the complete information about various loan programs you can make an informed decision about which program you should go for. Make this decision before you contact other lenders. Now the other lenders shall be diversified like you can contact a direct lender, a regional bank, a nationalized bank and a credit union. Each will offer you slightly different rates giving you a larger choice you can pick from. Another important thing is to contact these different lenders within a short time frame since the prime rate which affects the mortgage changes every-day and you need accurate information.
A good mortgage deal is hard to get but the above few tips can certainly help you in finding one.