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Home Mortgage Tips That You Can Use

Jul 15

Home Mortgage Tips That You Can Use

Securing a home loan is an extremely serious financial choice that requires a great deal of care. Doing this without proper information may cause problems. If you want a mortgage, but need to learn about the process, this piece is for you.

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Save enough money to make a down payment. Lenders may accept as little as 3.5% down but try to make a larger down payment. If you put down 20% of your total mortgage, you won't have to pay private mortgage insurance and your payments will be lower. You will also need cash to pay closing costs, application fees and other expenses.

 

If you are planning on purchasing a house, make sure your credit is in good standing. Most lenders want to make sure your credit history has been spotless for at least a year. To obtain the best rate, your credit score should be at least 720. Remember that the lower your score is, the harder the chances of getting approved.

 

Get pre-approved for a home mortgage before shopping for a new house. Nothing is worse than finding the perfect house, only to find out that you can't get approved for a mortgage. By getting pre-approved, you know exactly how much you can afford. Additionally, your offer will be more attractive to a seller.

 

Know what the going interest rate is. This will help you know when to lock in an interest rate. Many mortgage companies offer to lock you into a particular interest rate for a period of 30 to 60 days. If the interest rates increase, you are protected. If they decline you can opt for the new interest rate.

 

Don't apply for new credit and don't cancel existing credit cards in the six months before applying for a mortgage loan. Mortgage brokers are looking for consistency. Any time you apply for credit, it goes on your credit report. Avoid charging a large amount during that time and make every payment on time.

 

If you are having troubles with your mortgage, get some help. Consider counseling if you're falling behind on your payment schedule or just struggling to tread water. Counseling agencies are available through HUD. These counselors offer free advice to help you prevent a foreclosure. Call your local HUD office or visit them online.

 

Current interest rates on home mortgages are lower than they have been in years. Experts expect them to begin increasing again shortly, so now is a great time to purchase a home and finance it at a low rate. The shorter the term of the mortgage, the better the rate you will be able to get.

 

Make sure you pay down any debts and avoid new ones while in the process of getting approved for a mortgage loan. Before a lender approves you for a mortgage, they evaluate your debt to income ratio. If your debt ratio is too high, the lender can offer you a lower mortgage or deny you a loan.

 

As you can see, there is a lot to know about home mortgages, but with this information you are now prepared to apply. The tips located above will help guide you through the process. The only thing left for you to do at this point is to find a lender and put this advice to good use.