Should you refinance your mortgage? Interest rates are trending up, but they're still at historic…
You can get better financing for your mortgage when you follow these tips!
Buying a home is one of the largest investments you make and that makes your mortgage the biggest financial transaction of your life. Getting a great rate on your mortgage can mean the difference in tens of thousands of dollars over the life of your mortgage.
Additionally, not only does your mortgage rate add to what you’ll pay over time, you’re going to feel that rate on a monthly basis. A difference of only .05% on your interest rate can add substantially to your monthly mortgage payment.
There’s much at stake, so it pays to review your options, and get better financing when you can.
If you want to get better financing, you have to start with your credit score. That’s where your lender will start, and that’s what’s going to determine the mortgage you get. However, the good news is that no matter where you start with your credit score, there’s always room to improve.
Mortgage rates are based on tiered pricing, which means that your interest rate is based on varied criteria. The main criteria used is your FICO score. All other things being equal, the higher your credit score, the lower interest rate you’ll pay on your mortgage.
Pull your credit report and start working on any errors that you find. Focus on cleaning up any payment issues because your payment history determines about a third of your total credit score. Also, start paying down small credit card bills and then work on larger balances. Furthermore, getting current on your payments and paying down balances will affect your total score dramatically in just a few months.
Get Pre-Qualified and Pre-Approved
Once you’ve reviewed and improved your credit score, start shopping around for a mortgage. You can get better financing by comparing rates at different banks. Lenders make money by creating loans. Check rates at different banks and also ask them for pre-qualification or pre-approval for a mortgage.
Pre-qualification provides you with much information from the lender. It’s basically a quick look into your finances so that the bank can give you information about their available products. Additionally, you will find out what types of loans are available to you, approximately how much the bank will lend you and what your monthly mortgage amount might be.
Pre-approval is more in-depth. The bank will complete a full financial review that includes your credit history, your employment history, tax returns, and all other pertinent financial information. Pre-approval tells you exactly what the bank will loan you so that you know what price range you can afford. Furthermore, once you’re pre-approved, you can start house shopping and it’s a big perk to sellers if you walk in with your financing already in the bag.
Get Better Financing By Being Smart!
Now is the time to thoroughly review your options, before you sign on the bottom line. As previously stated, banks are in business to make money. Many are competitive and are willing to work with consumers to provide great loans at reasonable prices. If your local banks aren’t proving you with the numbers you like, then look online for mortgage companies and national lenders.
The Bottom Line
Start your search for the perfect home with confidence. Above all, get better financing when you take time to find the right lender!