Home ownership is a dream that many people are pursuing, and getting a mortgage is one of the steps towards achieving that dream. However, many people miss the opportunity to shop around for their mortgage. Many of the best mortgage lenders out there have different things to offer. Doing some comparison shopping before signing on the dotted line can potentially save you thousands over the life of the loan. It is worth taking a little time to ensure that you are getting the best deal.
Here are some steps you can take:
• Down payment. You are likely to get a better interest rate if you put some money into the deal through a down payment. The standard down payment is 20% but that can vary by lender.
• Educate yourself. Review your credit report to ensure that it is accurate – your credit score plays a large part in this process. Ensure you have easy access to any paperwork that you might need – you can find out from online research or a quick discussion with someone at your local bank branch what you should have available. Research what lenders are available (bank, mortgage company, credit union, etc) and what they are offering. This will give you a better feel for the lenders and what choice you have available to you.
• Preapproval. Many of the best mortgage lenders offer preapproval for a loan which will help you understand how much you will be able to borrow, and therefore how much house you can afford. Keep in mind that your down payment would be on top of (or added to) the preapproval amount.
• Details, details, details. Be sure to review all of the details and fine print of each loan. Be sure to understand the costs and benefits of choosing a fixed versus adjustable rate, the fees associated with the loan, the monthly payments, the interest rate, etc. Ask lots of questions to be sure you make the right decision for your situation. The more informed you are the better prepared you will be to make a good decision.
• Negotiate. All of the research you gathered while educating yourself can come in handy to ensure that you get the best deal possible. Be sure to ask your preferred lender if they can meet their competitor’s rates or fees. Ask for what you want in this competitive environment and you just might get it.
There is a little more involved in shopping for a mortgage than most other purchases but educating yourself and doing some comparisons can help you find the best lenders. Remember that a mortgage is a long term loan so small differences in rates or fees can add up over the life of the loan.