Home ownership is one of the American dreams, it’s a sign of prosperity and achievement. Another American dream is education, which we want to have in order to get a decent job so that someday, we may be able to afford buying a roof over our heads. So, it’s true, home ownership is something you would have to think about sooner or later, regardless of who you are. Some people want a home because buying one may be the largest single financial investment they will ever have to make.
Luckily, it’s not so hard to buy a home these days. Although it has a hefty price tag, a mortgage may help in funding it. So the real issue these days is knowing the right way of shopping for a mortgage. It also makes financial sense to look for the lowest rate because of one main reason – the interest rate charged on the mortgage determines the actual cost and the size of your monthly payments. That small interest rate can them make a big difference down the road. Here we are now discussing tips in shopping for a mortgage.
- Get a copy of your credit score. Lenders will use this to help determine if you qualify for a loan and what rate you’ll be charged.
- It is highly recommended that you compare quotes from different mortgage lenders first.
- Make sure that you also obtain all the relevant information beforehand: current interest rates, annual percentage rate, broker fees, and credit charges.
- Research current interest rates. The easiest way to do this is to call a number of lenders and ask them directly.
- Identify the rates for 30-year, 20-year and 15-year mortgages. The shortest-term loan is probably the best.
- Ask for details on the same loan amount, loan term, and type of loan from multiple lenders and then compare.
- Ask whether the rate is fixed or adjustable. If it is fixed, try finding out when and how the rate and loan payment could change.
- Find out how much down payment is required. Some lenders require 20% of the home’s purchase price as down payment
- After comparing and once a lender has made you an offer you are interested in, you may be able to negotiate for better terms.
- Ask for a written lock-in that includes the rate you agreed upon and the period the lock-in lasts after you’ve come up with an agreement
With these steps, you will definitely find the best mortgage rate for which you qualify. Do take some time searching though. Remember, the American dream is just a few steps away but don’t rush achieving it or you might be ending up with a nightmare!