Getting your first mortgage is an exciting time, but the procedure can be daunting and potentially confusing. Here we at GET.com will share with you some mortgage tips for homeowners so that you can ensure that your first mortgage application goes smoothly, thus saving you time and potentially money, while you go about finding the best home loan for your property.
- Improve Your Credit History
One of the main things your lender will be examining is your credit score. This can be obtained through three main credit bureaus, and indicates how likely an individual is to pay back their debt based on how they have handled previous financial responsibilities.
The better your credit score, the higher the likelihood you will be able to borrow larger amounts of money with lower interest rates.
Unfortunately, building a positive credit score cannot be done overnight, it is something which requires at least some time. For those of you looking to improve your credit score don't despair, with some effort and a little time this can be achieved.
Ideally over a period of around six months, concentrate on making all of your loan payments on time, and also all of your monthly credit card bills, paying off any outstanding balances.
Although lenders prefer positive credit history of a few years (the longer the better), following these steps will definitely help your score improve, and with it your chances of securing a better mortgage.
- Pre-Qualification & Pre-Approval
For a good estimate of how much you will be allowed to borrow, many people ask lenders to pre-qualify them for a mortgage. This is an informal process whereby the lender takes into account your assets, income and liabilities and makes a rough estimate on the amount you will be able to borrow.
Although this is not a formal agreement to lend the amount of money estimated, this is a useful, free service which allows you to gauge the price range you can afford when house-hunting.
Pre-approval, on the other hand, is like a more serious pre-qualification. In this process lenders check your credit as well as verifying your financial and employment information, before officially approving your ability to take out a mortgage.
Being pre-approved for a mortgage puts you in an advantageous position when house hunting, as sellers are more likely to favor those with proven sufficient financial resources to buy a property.
- Finding The Right Lender
Now you've improved your credit score and secured pre-qualification or pre-approval it's time to start shopping - not only for the right property, but the right lender. A traditional place to secure a mortgage would be a bank. However, many banks lack a real variety in the types of mortgages on offer.
Another option are mortgage brokers, who generally have a larger selection of loans available, usually resulting in better deals, even for those with a bad credit rating. The only disadvantage with mortgage brokers is that they tend to be more expensive than other lenders.
To save you time in shopping for offers from different mortgage lenders in the US, you can use GET.com's Mortgage Genius tool to search for real-time best mortgage rates from major lenders in the US for your state. Simply input your information and you'll get results in an instant!