Finding a Mortgage [mortgageinsurance-101.blogspot.com]
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With real estate prices falling down alarmingly, this is the best time to purchase a home. Unless you have struck a jackpot, you cannot buy a home with your savings; you would certainly need a home mortgage. Due to economic slowdown, the mortgage lenders have become exceedingly cautious, and most of them have tightened their lending criteria too. Hence, it has become exceptionally difficult to find a good home mortgage. Here are some useful tips to find mortgage with ease.
• Know how much you can really afford - Before running from pillar to post in search of good mortgage lenders, it is essential to ascertain the amount of loan you can actually afford to pay back in a timely manner. For this, you would have to calculate your total income. This should not only include your salary, but also the extra income coming from part time jobs or online businesses.
The monthly interest generated from your savings should also be included.After you have computed your total income, you should add together all your monthly expenses like electricity and telephone bills, house rent, credit card bills, shopping expenses and so forth. Subtract the total expenses from the total income; the result you get is the amount of money you can use to pay off your home mortgage.
• Take a look at your credit report - The mortgage lender will evaluate your credit report and accordingly decide whether to approve your loan application or not. A good credit report is that in which all the payments have been made punctually, and there are no errors and discrepancies. Sometimes due to uncontrollable circumstances, it becomes unusually difficult to make the payments on time.
If you have a genuine reason for delay as well as the supporting proof, attach it with your credit report.If you find errors on your report, then get it rectified without delay. It is a good idea to engage a credit report monitoring agency to handle your credit report. Such an agency will not just remove the inconsistencies from your report, but also will monitor any unusual and suspicious activities in your report. Furthermore, take concrete steps to improve your credit history. Start paying your bills on time and avoid spending on un-essential pursuits.
• Try to understand the mechanism mortgage lenders use to approve loan application - Mortgage lenders request you to fill out an application where you are asked to divulge a lot of financial information. You are also asked to submit your credit report together with the loan application. While examining your application and report, the lenders give a value to each item. In the end, they add all the values, and the total that they get is your credit score. Your chances of getting a mortgage depends upon your credit score; the higher the score, the better are the chances to get a home loan.
• Conduct a thorough research - Once, you have done your home work, you are ready to enter into the market and look for good mortgage lenders. You can ask your friends, relatives and colleagues to provide your recommendations. Prior to going anywhere else, find out whether you qualify for Federal Housing Administration (FHA) Home Loan or not. This is the best loan because of lower interest rate, lower monthly installments, lower closing costs and lower chances of foreclosure. If you are a member of a credit union, then you can also obtain a home loan from there. If you are unable to obtain a home mortgage from FHA and credit union, then start searching for good mortgage companies locally. Internet is a good resource of mortgage lenders.
• Compare and contrast - Before selecting a mortgage lender, it is important to compare the rates and monthly payment amount. There are a number of factors that affect the rates. For instance, your credit ratings; the probability of getting better rates increases as your credit rating increases. Additional expenses associated with the mortgage like closing costs that include title insurance, survey costs, title search and title transfer cost, also affect the rates to a large extent.
• Avoid sending a number of applications - Don't send a series of loan applications in the hope that one of them would be accepted. Every mortgage lender will check your credit report, and each time the credit report is checked, a record is made. If the mortgage lender finds out that you have submitted your loan application to several other lenders also, your chances of getting a good home loan are drastically curtailed.
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