Find Out How to Get the Best Mortgages

Buying a house is one of the biggest decisions you’ll ever make and the mortgage that will come attached to that house is probably the biggest debt you’ll ever owe. That makes it even more important to find out how to get the best mortgage possible for your home.

One of the most disappointing things for first time homebuyers to discover is that the low, low rates displayed in many lenders’ ads are based on buyers with a great credit score, a large down payment, and a very low debt-to-income ratio, the difference between how much they make and how much they pay out each month in bills.

Just because you may not meet their strictest criteria doesn’t mean you’ll be stuck paying the highest rates and payments allowable by law. There are a few things you can do to make sure you’re getting the best mortgage you possibly can. Even a half-percent difference in your rates can mean a significant savings over the life of the mortgage, so it’s in your best interest to do all you can to get the best rates possible.

1.      Pay your bills on time – If you plan on ever buying a home, it’s not too early to start preparing. Lenders look much more favorably on consumers who have shown they make payments on time, all the time. The more times you’re late, or miss a payment completely, the bigger the risk you’ll appear to be.

2.      Save toward a down payment – The more you’re able to put down on a house, the less likely you’re perceived as a default risk by the lending agency. Be sure to ask if putting down a few thousand more would significantly lower your rates. If it will, you may want to think about pulling a few more out of your savings account.

3.      Lower your debt-to-income ratio as much as possible – Pay off as much of your current debt as you can before you begin applying for a mortgage anywhere. The bank or mortgage company will want to be as sure as they can be that you’ll be able to afford a new payment along with the debt you already owe. Reducing the amount of debt you’re carrying will also help raise your credit score, which also plays into how much your mortgage loan will cost you.

4.      Don’t open or even apply for new credit accounts – Did you know every time you apply for a credit card or any other loan, there’s an inquiry made to the credit bureau that goes on your credit report? This can lower your credit score by several points. Just don’t do it if you’re planning to buy a home in the near future.

5.      Shop around before you decide on a lender – Some people don’t look farther than their current bank for information about mortgage loans. This can be a big mistake, since there are many other sources for a mortgage loan. Do some research and get quotes from at least three different sources before choosing the best one for you and your family.