What to Know Before Getting a Mortgage
A mortgage could be considered your best friend--especially when you want to finance the purchase of your new home. A mortgage is, quite simply, a home loan. When you take out a mortgage, you promise that you will repay the loan over the next 15 to 30 years. A mortgage payment includes not only the principal and interest, but, in many cases, associated costs, such as insurance and taxes. Collectively, these four together are known as PITI.
According to Broderick Perkins of Realtor.com, if you are not able to pay your debt, the lender has the right to sell your property so the debt would be paid. So that you can repay your debt, you need to make monthly payments that would cover the PITI, he says.
With good credit, some shopping skills, and, of course, persistence, you can work on finding deals that will benefit you and your family. Here are some mortgage tips you can work on if you are seriously considering purchasing a home in 2013.
Buy a house--Now!- Buyers should seriously consider purchasing a house now. It is a great time to buy. Not only are interest rates near the bottom but, in many areas, home prices are also low. Housing prices are expected to increase over the coming months. One of the best mortgage tips we have heard is to fast track the buying process by getting a preapproval of your mortgage before you begin the search for a new home. If you have a few bumps in your credit report, there are even ways to get mortgage with bad credit. You may have to pay a higher interest rate for a while, but you always have the option of refinancing when your credit improves.
Compare conventional loans versus FHA- There are some homebuyers who choose the Federal Housing Administration (FHA) mortgage because of the very low 3.5 percent down payment. But, there are additional fees connected with the FHA loan (mortgage insurance is one), which adds to the loan that you have to repay. So, with this in mind, why not get a conventional mortgage which might save you a little extra money? With a conventional loan buyers are generally required to put down as little as five and as much as 20 percent payment up front. But if you can afford the higher down payment, it might be worth comparing the costs and benefits of a conventional loan to the FHA loan.
Make sure that your credit score is healthy- If you plan to apply for a mortgage, your credit score is one of your most valuable assets. You need to ensure that your credit score is golden. Most lenders want to see a clean credit record and, in order to get the best deal you will need a score of at least 720. Those whose credit score is lower than that may have a more difficult time getting approved or they will pay a higher interest rate. To check whether you can apply for a mortgage loan based on your credit score, you need to get a copy of your credit report and see how it all adds up.
Pay off your mortgage earlier- The good news for home owners is that you can expedite a 30-year mortgage into a 20-year or 15-year mortgage. Keep in mind, however, that this also requires higher payments on the shorter term loans. But, you will save money over the long term as you will be paying less in total interest. This is great as long as you are sure you can afford the higher payments, in addition to saving money for your emergency fund, retirement, living expenses, and paying other debt.
Look for good service and low rates- Of course, this is a given when you are looking for the best mortgage for your situation. Get quotes from different lenders and compare and contrast costs and fees. You will want to look at not just the interest rates, but the quality of service, as well. Begin with referrals from family and friends. They can provide information about their lender, the rates, and their customer service. Take your search online, too, being sure to read reviews from people who have dealt with the lender. This will help you discover which lenders you should like to approach.
Stop putting it off and refinance- If you have not refinanced lately, chances are you are paying a higher mortgage interest rate than you ought to be paying. Take advantage of the lowest mortgage interest rates and look into refinancing.
Take advantage of HARP- If you have tried to apply for a mortgage refinance but failed in the process, you might want to look into the Home Affordable Refinance Program (HARP). This program has been revamped to include home owners who are under water with their mortgages. The great news is that most lenders are now open to HARP refinances. If your lender is still unwilling to consider a HARP refinance, then it is to your benefit to look for a banker who will consider it.
According to Broderick Perkins of Realtor.com, if you are not able to pay your debt, the lender has the right to sell your property so the debt would be paid. So that you can repay your debt, you need to make monthly payments that would cover the PITI, he says.
With good credit, some shopping skills, and, of course, persistence, you can work on finding deals that will benefit you and your family. Here are some mortgage tips you can work on if you are seriously considering purchasing a home in 2013.
Buy a house--Now!- Buyers should seriously consider purchasing a house now. It is a great time to buy. Not only are interest rates near the bottom but, in many areas, home prices are also low. Housing prices are expected to increase over the coming months. One of the best mortgage tips we have heard is to fast track the buying process by getting a preapproval of your mortgage before you begin the search for a new home. If you have a few bumps in your credit report, there are even ways to get mortgage with bad credit. You may have to pay a higher interest rate for a while, but you always have the option of refinancing when your credit improves.
Compare conventional loans versus FHA- There are some homebuyers who choose the Federal Housing Administration (FHA) mortgage because of the very low 3.5 percent down payment. But, there are additional fees connected with the FHA loan (mortgage insurance is one), which adds to the loan that you have to repay. So, with this in mind, why not get a conventional mortgage which might save you a little extra money? With a conventional loan buyers are generally required to put down as little as five and as much as 20 percent payment up front. But if you can afford the higher down payment, it might be worth comparing the costs and benefits of a conventional loan to the FHA loan.
Make sure that your credit score is healthy- If you plan to apply for a mortgage, your credit score is one of your most valuable assets. You need to ensure that your credit score is golden. Most lenders want to see a clean credit record and, in order to get the best deal you will need a score of at least 720. Those whose credit score is lower than that may have a more difficult time getting approved or they will pay a higher interest rate. To check whether you can apply for a mortgage loan based on your credit score, you need to get a copy of your credit report and see how it all adds up.
Pay off your mortgage earlier- The good news for home owners is that you can expedite a 30-year mortgage into a 20-year or 15-year mortgage. Keep in mind, however, that this also requires higher payments on the shorter term loans. But, you will save money over the long term as you will be paying less in total interest. This is great as long as you are sure you can afford the higher payments, in addition to saving money for your emergency fund, retirement, living expenses, and paying other debt.
Look for good service and low rates- Of course, this is a given when you are looking for the best mortgage for your situation. Get quotes from different lenders and compare and contrast costs and fees. You will want to look at not just the interest rates, but the quality of service, as well. Begin with referrals from family and friends. They can provide information about their lender, the rates, and their customer service. Take your search online, too, being sure to read reviews from people who have dealt with the lender. This will help you discover which lenders you should like to approach.
Stop putting it off and refinance- If you have not refinanced lately, chances are you are paying a higher mortgage interest rate than you ought to be paying. Take advantage of the lowest mortgage interest rates and look into refinancing.
Take advantage of HARP- If you have tried to apply for a mortgage refinance but failed in the process, you might want to look into the Home Affordable Refinance Program (HARP). This program has been revamped to include home owners who are under water with their mortgages. The great news is that most lenders are now open to HARP refinances. If your lender is still unwilling to consider a HARP refinance, then it is to your benefit to look for a banker who will consider it.
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