Tips on Getting the Best Mortgages
By Nicole Rodgers
Shopping around for a mortgage is not as difficult as it may seem. Although there is a lot of paperwork involved, comparing offers and searching for a good deal is worth your effort. Before going for a mortgage loan you should understand how things work and then try to get lower interest rates. Here are some tips on getting the best mortgage:
Improve Your Credit Rating
Before you start shopping for a home loan or mortgage, check your credit record. Paying down your financial obligations and getting rid of debt is a good start. Individuals with a poor credit record have a difficult time finding competitive deals. It is highly recommended that you improve your credit score before applying for a mortgage. Credit scores over 620 are usually approved.
Shop Around and Compare Costs
Although you might be tempted to go to a local bank because you have a checking account there, it is advisable that you first research your options to make an informed decision. Contact a broker, use the Internet to get loan quotes and search for information in your local newspaper. Each bank, loan association or mortgage company has its own interest rates, so be sure to evaluate a number of offers from different providers.
Make a Large Initial Deposit
The size of your deposit is very important when it comes to getting a mortgage. The best rates out there are available only to those with a large deposit. The larger the deposit you have, the more money you will save. The good news is that there are a couple of things you can do in order to build up your deposit. Getting an unsecured loan is a viable option. You may also ask your family or friends for help, reduce daily expenses or use your other savings.
Decide on the Right Mortgage
If you decide to apply for a mortgage, be sure to do proper research. Potential homeowners can choose from various types of loans. Some of them prefer a 30-year mortgage, while others opt for fifteen-year fixed rate loans. Evaluate your budget and decide how much you can afford paying every month. Remember to ask each lender and broker about the loan’s annual percentage rate (APR). The APR includes broker fees and points, as well as the interest rate that applies to the loan.
Act Fast
Once you find an offer that suits your needs, act quickly to secure the mortgage. Although you need to do research and evaluate your options, it is important that you act quickly to avoid disappointment and get the best deal out there. You may hire a broker and ask for expert help. A good broker can move quickly to secure funds for you.
Applying for a mortgage loan requires your full attention. Be sure to get all the information you need from several lenders or brokers. Ask about the lender’s requirements for a down payment and try to find out what each fee includes. Make lenders compete with one another for you. Examine your credit report and make sure you don’t borrow more money than you need. Don’t hesitate to contact a broker; he can help find a loan that best suits your needs. Get loan quotes from multiple sources and check the reputation of the brokers and lenders you interested in working with.
Nicole Rodgers has been in the mortgage industry for 4 years; she currently contributes to blogs dealing with ways for people to refinance a home loan and how online trading can help families earn extra income.
Mortgage Home Loan Questions To Consider
By Nancy Smith
You may have dreams of buying your own home but are not able to fulfill those dreams because of lack of resources. Mortgage loans may help you bring your dreams to reality. Mortgage loans are loans that are secured in order to pay for a house or for a piece of property. The property that you purchase with this loan is treated as the collateral on this loan. This means that if you do not make the mortgage payments, then your property will be taken away from you.
There are other mortgage questions that you should consider before you opt for the loan.
What is the principal amount of the loan?
The principal implies the amount that you will need to borrow. It is the value of your house or property after the down payment has been deducted. Based on how much you earn and your credit score you can look around and find out how much banks are willing to offer you.
What type of mortgage you should opt for?
You must find out in advance what type of mortgage loan you would want to take out or is available to you. There are two types of mortgage loans the fixed interest rate mortgage loans and the adjustable rate interest mortgage loans. When you opt for the fixed interest rate loan you pay a fixed amount as payment towards your mortgage every month. However, when you opt for the adjustable rate mortgage loan you pay a lower rate of interest which changes gradually with changes in the market. Thus, you must find out which type will be suitable for you.
How much money can you borrow?
One of the most important mortgage questions is how much can you borrow. To find this out you have to consider various factors. Some of those factors are as follows.
1. Amount you pay as down payment: Down payment is the amount of money that you pay towards your house or property from your own pockets. Your mortgage amount is also affected by the amount that you are willing to pay as down payment. After the economic crisis some mortgage lenders are not granting loan requests if the borrowers are not able to make 20% down payment on their homes. However, the down payment requirement may vary from lender to lender so speak with your mortgage broker or bank. You should also be aware of the fact that you may take out FHA loans or Federal Housing Administration loans by making 3.5 % down payment on your home.
2. Your total monthly income: An important factor that determines how much mortgage you will get is your monthly income. In most cases banks suggest that it is best if your housing expenses are not 25% to 28% greater than your gross monthly income. Thus, you must be aware that the amount that you earn is also an important determinant in how much you can borrow.
3. Your credit score: In order to find out how much you can borrow you must find out the state of your credit report. Your credit score is bound to affect the rate of interest that you are charged with. This will directly affect the amount that you can borrow.
These are a few mortgage questions that you must consider before you opt for a mortgage loan.
This is a guest post by a Community Mentor of MortgageFit and she has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry and solved various mortgage questions. Few of her popular articles would include names like ‘Mortgage that you can afford’, ‘Mobile Home Loan with Bad Credit’, and How much mortgage can I borrow?’
How To Improve Your Credit Score
By Karen Boies
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.
Which parts of a credit history are most important?
35% – Your Payment History
30% – Amounts You Owe
15% – Length of Your Credit History
10% – Types of Credit Used
10% – New Credit
Top 5 tips for improving your credit
1. Pay your bills on time.
Pay your bill in advance of the due date, ensuring it reaches the creditor before the payment is due. Pay off debt, don’t move it around. Owing the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.
2. Contact your creditors as soon as you know you will have a problem paying bills on time.
Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports.
3. Reduce the number of active credit cards to 2 or 3 accounts.
Revolving credit includes department store cards, grocery store cards and gas cards. Establish a minimum of 2-3 trades with good repayment history for 24 months.
4. Keep account balances within 50% of the available credit limit.
Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down.
5. Pay or satisfy all outstanding collections and judgements.
It is advisable to avoid applying for credit and having your credit report checked unless you have a genuine need for credit. The risk to consumers with a lot of activity on their credit report over a short period of time is that a lender may interpret this as a sign that you are in financial difficulty or taking on more debt than you can manage. Fortunately most scoring systems will not penalize you if they determine that you are shopping for the best rate on a particular product like a mortgage.
Your credit score is important and you need to take action to make sure that you will be able to borrow money when you need it. If you currently have a low credit score don’t be discouraged. Take action. Start doing the things that will cause your credit score to improve. Be consistent and before you know it you will have better credit.
Karen Boies is a mobile mortgage planner in Greater Vancouver. If you have any questions about your credit score or about getting a mortgage, please call Karen at 604-726-9550 or email at Karen@mortgagecentrecitywide.com
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