Tips For Securing a Mortgage

For most of us, we'll finance the purchase of a new home by taking out a mortgage. Doing so can be a somewhat intimidating process so here are some tips to get you started:

Check Your Credit

• Request a free copy of your credit reports from one of the services out there
• Contact the major credit agencies (Experian, Equifax, and Trans Union) in order to correct any errors you find

Do Your Research

• Determine how much you can afford to spend (Now and in the Future)
• Determine how long you plan to spend in your new home.
• Research the various types of loans and programs available to you.
  • Traditionally, the longer you plan to spend in your new home, the more likely a fixed rate loan may be the best choice. An Adjustable Rate Mortgage (ARM) may be a better deal if you are only planning to spend a few years in your new home before moving.
• Determine if paying points to lower your mortgage rate is worthwhile.
  • As a general rule, the return for paying points (paying less interest) grows the longer you stay in your new home.

Have Your Documents Ready

• While each lender may have slightly different requirements, they all want to get a good look at your current financial status. Be prepared to provide
  • Pay stubs
  • Tax Returns
  • Banking & Investment Account Statements
  • Statements for Outstanding Debts (Car Payments/Lease,)
  • Rental Agreements
  • Divorce Decrees
  • Proof of Insurance for new home

Avoid Common Mistakes

• Avoid making a major purchase.
• Avoid making a career change.
• Avoid changing banks.
• Avoid paying off debts, unless your lender requests it.

Lock In Your Rate

• Once you’ve done your research and found the best mortgage product, lock in your rate with your mortgage provider. This protects your rate for a specified period of time, even if interest rates go up.