Before you start looking at homes, the first thing you will need to accomplish is doing some mortgage shopping. Obtaining a home loan (and buying a home) is most likely the biggest purchase you will ever make, so taking your time during this crucial process when shopping for a home loan is very important.
There are many factors that go into shopping for a mortgage for your future home, so do your research and take your time. You most likely do not want to just take up the very first mortgage lender that you find as different mortgage lenders have different positives and negatives. One mortgage lender may make it easy to buy a home through them, whereas another mortgage lender may make it a more expensive or a tedious, longer process
Shopping for the best mortgage can help you prevent any problems when shopping for your new home. It's supposed to be a fun and exciting process and choosing the best mortgage for your situation can improve the situation.
Below are five mortgage shopping tips.
1. Be prepared before you begin.
Before you even start looking to find a home loan that fits you and your family best, you should make sure that your financial situation is prepared for it. This means making sure that your credit score is where it needs to be, that you have a good amount of money saved, that you have a stable and reliable job, and so on.
Being prepared in these ways will make you look more appealing for a mortgage, which will hopefully mean that you will get the best home loan that is available to you.
2. Think about the different mortgages you can get.
There are many different mortgages out there that you may qualify for and be interested in. There are fixed-rate mortgages, 15-year mortgages, 30-year mortgages, adjustable-rate mortgages, VA loans, FHA loans, and more.
Each have their own positives and negatives, so finding the mortgage lender that can best serve you for that particular mortgage is usually the best idea.
3. Find the best mortgage lender.
When shopping for a home loan, you will want to make sure that you choose the best mortgage lender. The mortgage lender can either make your home buying process go smoothly or they can make it a long and tiring process, so it is usually a good idea to spend time choosing your mortgage lender.
Your mortgage lender will be the ones to approve you for a home loan, decide how small or large of a mortgage that you will be pre-approved and later on approved for, and so on. Be sure to ask about additional fees and about points as well, as this can play as a big factor into your future mortgage.
4. Don't apply for new credit.
While you are in the middle of mortgage shopping, it is usually a good idea to stop applying for new loans and to not have your credit checked by anyone other than potential mortgage lenders. This is due to the fact that your credit score may drop whenever your credit report is checked, which can then impact whether or not you will be approved for a home loan, or affect your rate.
5. Obtain the best interest rate.
Possibly the most important part of the mortgage shopping process is obtaining the best interest rate. This is an important part of the home loan process because even just a difference of a few percentage points can mean the difference of hundreds of dollars each month alone (depending on how small or large the mortgage is that you are taking out). You never want to assume that just because it's a 0.5% or 1.0% interest rate difference, that it's not a big deal, because it most likely is. It's money that adds up substantially that you could be saving for a long time frame, such as 30 years. It is crucial to get the best possible interest rate on your home loan that you are able to receive.