Helpful Advice on Getting a Home Loan
by Serg Harros
Knowledge is often defined as learning from ones mistakes. In the case of getting financing for a loan, you can use the following without having to make the mistakes yourself.
1. When it comes time to sign your life away in blood on the final mortgage documents, take the time to read them. Specifically, take a close look at the math being used. It is often wrong!!!
2. In the old days, it took weeks to get approved for a mortgage. Many lenders now use a software program to determine if they will give you a loan. If your credit is in good shape, it can take as little as three days for approval.
3. Adjustable rate mortgages fix their interest rates on various financial markets. Perhaps the most popular with lenders is the One Year Treasury Security Index. It is based on the weekly average of US Treasury security yields.
4. To make sure the rates don't change after a lender approves your mortgage, you can lock in the loan by paying a fee. This does not lock you into the loan, only the lender. If you subsequently find a better deal with another lender, take it!
5. When you apply for a mortgage, the lender is going to ask you what reserves you have. Ideally, you should reserves equal to three months of your expenses.
6. Should you go with a fixed or adjustable rate mortgage? In general, go with fixed when rates are low and an adjustable when rates are high.
7. When you apply for a mortgage, your credit score is a key factor. A FICO score of 740 or above is considered great credit, 700 to 739 is good, 680 to 699 is okay and anything below is bad.
8. The first step to finding a mortgage is to find a lender. You might be surprised to learn that a majority of lenders do not deal directly with the public! So, how are you supposed to find them? The answer is to use mortgage brokers.
9. Don't assume anything about your credit. Before you apply for a mortgage, check all three credit agencies. Congress has determined that 50 percent of the negative marks on most people's credit are errors.
10. When determining the interest rate on an adjustable mortgage, some banks use the Prime Rate. This rate represents the top rate banks give their best clients when lending them money.
Home ownership is the cornerstone of our society. The government and lenders know this and are a pivotal part of financing such ownership. In short, you should be able to get a loan, so don't worry too much.
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