Getting the right mortgage to go house hunting is not rocket science, so we are going to give you some useful tips for you to get the most out of this process. We will start by taking about how to clean up your credit, the pre-qualification process, the pre-approval process, and the different types of lenders you can find in this market.
Clean Up Credit
People with a high credit scores will be able to borrow more money from lenders at lower rates of interest. So get a full credit report right away. You need to check the score out right away to fix any error or improve your score over time. If you have a low score, pay off your credit card balance, close cards you are no longer using, and avoid incurring in any new debt. In addition, spend the next 6 months making all your loan payments on time.
Pre-Approval and Pre-Qualification
You have to meet with your lender to provide them information on your liabilities, income and assets. The lender will assess this information to let you know the amount of money you are allowed to borrow. Although the process is informal, you need to get the pre-approval of your loan before applying for a loan in a serious fashion. Next your lender will verify your employment and financial data as well as your credit rating to make a final decision. In addition, the pre-approval of your loan will give you the upper hand while negotiating the price of a house with a seller.
Getting a Lender
If you read the paper, turn on your TV, or drive down any roadway, you will realize there are plenty of businesses willing to give you the kind of mortgage you want. Mortgage brokers, banks and online vendors work very hard to give you the opportunity to get some money from them. Banks offer very competitive fees, strong brand names and face-to-face treatment and service. Mortgage brokers are great for people with low credit rating. Online mortgage sites will allow you to compare different lenders in real time, and you should go house hunting once you are pre-approved. So spend the money only if you have assessed different offers from sellers.
Remerber that you have to clean up your credit if you have a low score in order to get the right mortgage with an low interest rate. In addition, take advantage of all the different lenders out there and assess every offer. You may also want to download this guide from Freddie Mac on getting a mortgage: http://www.freddiemac.com/singlefamily/docs/Step_by_Step_Mortgage_Guide_English.pdf