People seeking out their first home mortgage fail often to do enough research before settling on a lender and loan product. The following four tips can help you make better choices during the entire process:
Check Reviews About Lenders by Other Borrowers
The internet has given borrowers the ability to review banks, credit unions and other lenders in an honest and openly public forum via reviews sites, blogs and social media platforms. With these reviews, first time buyers can cross-reference the experiences of other borrowers to see if a specific lender who interests them has a good, poor or bad history related to lending and customer service experiences. Reviews can also provide first time borrowers with tips and tricks for better handling each step of the process.
Wait Until You Have Increased Your Credit Score
As with any other type of loan, your credit score helps dictate many things including the amount of money you can borrow and the interest rate you receive from a financial institution. A high credit score gives you more flexibility and a better deal. A low credit score can result in you paying more in fees over time.
Don’t Give Up If You Can’t Make a High Down Payment
Government-backed mortgage products are typically designed today to help first time home buyers who have poor or weak credit histories and little money to put down. With a Fair Housing Act product, for example, you might be able to procure a loan that only requires less than four percent of the total balance as a down payment as long as you can prove that you have a steady income and make enough money to repay the debt through monthly payments. A first time buyer advisement firm like California Mortgage Advisors, Inc. can help you find FHA and other products best suited to fit your background and needs. Once you know the size of the loan you need to purchase a home, you can use a home loans calculator to compare mortgage types.
Watch Out for Unnecessary Fees
Many first time buyers fail to recognize that some of the fees that appear in their mortgage documentation are added on to recoup monies lost through, for example, a lower interest rate or shorter repayment term. Always try to find a lender and product that does not have a locked-in rate fee or a monthly payment fee. Never allow a lender to charge you both a maintenance and annual fee, as they are essentially the same fee. Also, try to find a product that does not have a high prepayment fee or any prepayment fee at all. Lastly, watch out for the points tactic where the money from waived fees is recovered by a lending representative through the amount of money that you pay for a points discount to get a better interest rate.