The process of purchasing a new home should be one of happiness, excitement, and the sensation of watching your dreams come true. After all, for many people, the purchase of a new home is indicative of a brand-new chapter in life, one that should be welcomed with open arms. Part of making that dream come true is getting the right mortgage lender for your needs. Nothing can make this new chapter sour as quickly as poor or predatory lending practices for the big purchase. Below are some tips to help you prepare to find the best mortgage lender for your budget as provided by the mortgage professionals at Rex Homes.
Set Your Budget
For starters, you must determine the budget you’re working with. This should come far before you have any correspondence with a lender so that you make the most objective decision possible. When setting your budget, you must maintain a general awareness of the current housing market, as that will play a largely influential role in the pricing of your future home. You must also ask yourself the following questions:
- How much can I afford in a monthly payment?
- How much will this deal cost at closing?
- Will I qualify for approval for this loan?
Be vigilant with this step, as settling for an expensive loan will make your borrowing experience unsustainable in the future. This can have serious repercussions if ever you defaulted due to financial restrictions.
Determining the Best Interest Rates
Multiple factors play into what interest rate you might be offered upon approval. Some of these are:
- FICO score
- The total amount of the loan
- What type of loan you’re borrowing
- Whether you are a first-time homebuyer or not
Keep an eye on this detail, as this will be a deciding factor in the duration and ultimate cost of your home loan. The lower the interest rate, the less money you have to pay in addition to the principal balance. This could allow you to pay off your home much sooner (or later) than expected.
To prepare yourself for this step, you must review different lenders’ policies on interest rates and plan for this as you did your budget. Before engaging with lenders, monitor your credit score closely, as higher scores are the key to landing low interest rates.
Now that you’ve set the criteria for the lender you’re looking for, you’re ready to start comparing lenders. Never settle for the first lender who happens to answer the phone. Shop around the rates of various lenders and see which one matches your needs.
(Keep in mind that you should avoid hard inquiries as you shop around. This will lower your credit score and keep you from qualifying for preferable rates. Only progress toward preapproval once you are ready to commit to a choice – for instance, it’s best to save preapproval applications for your top three choices.)
Navigating the world of potential mortgage lenders can be a bit confusing, and even overwhelming at times. With the help of an experienced mortgage professional, you can narrow down your options and find the perfect rates for you, all while keeping your credit score and finances intact. Get in touch with a mortgage professional today and they will walk you through each step listed here to find the mortgage that is best suited to you.