December 12th, 2016 5:07 AM by Jackie A. Graves, President
Tips for finding the
right mortgage for you, and keeping your bottom line in mind as you search for
The housing marketing is heating up with mortgage
breaking through the 4 percent threshold, and very likely staying above that
level next year, all while home prices are also increasing. To make the best
homeownership choice in 2017 in the midst of these higher cost factors, a
consumer should take action in four areas: strengthen credit, shop smart for a mortgage, choose the house
carefully and wisely negotiate price.
your credit score before you look for a mortgage. The
majority of people don’t know their credit
score until they begin
to look for a home or mortgage.
looking for a home can take anywhere from one to three months on average,
sometimes even longer, it could pay off to use the home shopping time to
strengthen your credit score, especially if it means getting a lower mortgage
rate. How much lower? Although not every lender is the same, a strong credit score
can cut as much as half a percent from your rate.
housing counselor or credit counselor can provide guidance on what to do to
boost a credit score while shopping for a home.
just as it could pay off to improve your credit before applying and getting
approved for a mortgage, buyers shouldn’t assume that an approved mortgage is a
done deal. Until all of the paperwork is signed and the home’s keys are handed
over, a lender may review the agreement to see the factors that led to a loan
approval haven’t changed.
example: Making purchases that change your credit picture for the worse – like
adding new debt or paying a credit card late, even inadvertently – before you
buy the house could lead to a lender rescinding the mortgage approval.
Shop around for the best
mortgage. As said before, not every lender offers the same mortgage
rate, so shopping around is essential, but something the average person doesn’t
do. According to data from the Consumer Financial Protection Bureau, nearly
half of people who apply for a mortgage don’t shop around. Failing to do so could
be expensive month
after month, and really add up after several years.
this example of someone borrowing $200,000 for a mid-price home. At a 4 percent
rate of interest, the monthly payment is approximately $955. The same amount
borrowed at 4.5 percent increases the monthly mortgage to $1,013, or nearly
$700 each year.
important as it is to obtain the best
mortgage rate, it’s also important to watch out for fees charged by
mortgage lenders. These fees go by various names, another reason to work
closely with a housing counselor throughout the mortgage process in order to
navigate the complicated process.
Choose your home carefully. With
a strong mortgage approval letter in hand at a great rate, it’s time to find
your home. However, a tight market in 2016, especially for first-time buyers,
is likely to persist to some degree in 2017. A market with low housing supply requires a buyer to look
for diamonds in the rough, and perhaps be willing to accept the not-so-perfect
doesn’t mean a buyer should settle for a house that doesn’t meet his or her
needs. Keep your list of must-haves front and center, but make sure you know
the difference between must-haves and nice-to-haves. A real estate agent that
listens to you and clearly puts your interests first is a great partner in the
home search process. A crystal clear focus on your must-haves could open up
different communities, perhaps with better price points for your budget, and
housing counseling organizations can provide a homebuyer with a starter list
of real estate agents from
which to choose. However, just like when shopping for a mortgage, shopping for
a real estate agent takes time. Remember, this is the person who is going to
help you make what is probably the largest financial purchase of your life.
Negotiate, negotiate and
negotiate. If real estate is location, location, location, then
homebuying is negotiate, negotiate, and negotiate. Unless you’re buying in the
most heated and competitive markets, there is always room for negotiation.
Here’s where picking the right real estate agent pays off.
it’s the price – probably the most important item to negotiate – or if the
seller will pay a portion of closing costs, or provide a home warranty on major
appliances, approaching the seller with a list of things you want is something
everyone should do. Remember, the seller wants to sell, and you want to buy.
Successful home purchases that work for both sides are made in the middle.
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