If you are planning to buy a property, whether it is going to be your primary residence or if it is going to be an investment, there is a lot that goes into it. One of the biggest hurdles is finding the right type of financing. In some cases, the best way to get financed is through a traditional lender. If you have closed a deal within the past 5 years you would know that the process have changed a great deal. While the basic steps and the requirements have remained the same, the paperwork and documentation necessary has more than doubled. All of this extra work has added days to the closing period. This can have an impact on the interest rate as well as the loan approval. If you want to get the best financing deal, you don’t need to feel intimidated. You should follow these 5 tips to help you get a great deal on your mortgage. –
Understand Your Options
Whenever you are applying for a loan, you should know what you are getting yourself into. Many people who are planning to buy a home are more focused on finding the right property rather than finding the right mortgage is their last concern. When you are starting your property search, you should also be looking into mortgage options. In doing so, you should look at all of the loan options available. You should find the right loan for your situation. If you are not planning to own the home long term, a 30 year fixed mortgage may not be the best option. This is a case where a short term adjustable rate mortgage (ARM) would be the best option. If you are planning on using the property as a rental, you should explore a hard money option. Even if it isn’t the best option today, it could be at some point down the road. It is a good idea to do your research and learn all that you can about the different type of loan options and which situations they are best for. When you do, you will already have things started if you find a property that you like.
Be Ready to Act Fast
If you are considering making an offer on a property, you need to be ready to act quickly. If you are spending time scrambling around trying to find financing, you could miss out. To keep this from happening, you should have everything that you need for the loan in place before you even start looking for homes. You will need things like your tax returns, driver’s license, social security card, business license. These things don’t need to be updated regularly, therefore, you should keep them together in a folder in your home. Other items, such as rent checks, bank statements, and income documents do need to be updated each month. You should make sure that they are, and keep them in a folder that you can easily access so that you can update the files. You should also keep a copy of your credit report and an updated pre-qualification letter on file. The more documents that you can quickly offer to your lender or mortgage broker, the easier the process will be. If you can take just a few days off the documentation process, you can speed up the projected closing date. This will help you easier land the deal.
Getting a mortgage would be very simple if everyone has a lender on speed dial just waiting to approve them for the lowest rate mortgage possible. Unfortunately, this almost ever happens. This is why getting a mortgage is so much work. It is a good idea to shop around for various lenders before you settle on one. Not only should you shop around for lenders, you should also shop around for homeowners insurance companies and attorneys to help with the closing. When you are shopping around for all of these things, you want to look for not only price, but efficiency and experience. If you are worried that getting your loan approved might be a problem, you should make getting it closed your first priority. You may need to use a mortgage broker who has access to certain lender programs. In the process, you shouldn’t be cheap but you shouldn’t be give anything away either. To be safe, you should speak to at least three lenders, insurance companies, and attorneys to find the best price.
Home buyers always want the best possible deal, however, you need to understand that interest rates change all the time. They can change daily and even a few times in one day. You may find a good rate but you want to wait for it to go down an eight of a point. This can end up costing you more money. If the rates go up instead of down, you will end up spending more. Often times, the interest rates go up faster than they go down. On a large loan, this can have a huge effect on your monthly payments. As soon as you are locked in, you can no longer take advantage of lower rates. The good news is, however, that you don’t have to worry about getting stuck with a higher rate. When you find a rate your are comfortable with, lock it in.
This is one of the biggest transactions that you will ever make, therefore, you should be in control. If you have a question about something, don’t be afraid to ask. Asking one question could even help you get a better deal. In some cases, it could save you 1,000 by using the right lawyer or by questioning a broker fee..If you don’t think something is right, say something.
Any loan fees will be disclosed at the time that your application is approved. If you follow the 5 steps listed above, you can be sure you will get the best deal on your mortgage.