Have you decided to make the leap into homeownership? That’s fantastic! Purchasing a home is one of the most important decisions you’ll make in your life. Important enough that you need the right partner to go through the process with you. Not a spouse, but a mortgage lender. Someone who will work in your best interest to find a loan that best fits your needs, all while answering your questions and guiding you through the process. It does sound like a lot, doesn’t it? Especially when there are an abundance of mortgage lenders you can choose from.
So, how do you choose the perfect one for you? You can start by following these steps:
Build your credit. The first thing you want to do when starting your homebuying journey, or applying for any type of loan, is to look at your most recent credit report. This way, you can fix any errors that might be negatively affecting your credit score. You’re allowed one free credit report a year, so if you haven’t gotten your free report yet, you can visit AnnualCreditReport.com. Think you might have a low credit score? Take a couple of months to build your credit. The two best ways to improve your score are paying your credit card balance on time and in full every month, and trying to keep your balance below 30% of your available credit.
Figure out your budget. Just because you get pre-approved for a certain amount, doesn’t mean you should maximize the payment to the highest possible amount. When you’re getting preapproved, the lender is looking at your current loans, income, and debt. Other expenses such as utilities, food, gas, and contributions to an emergency fund are not part of their calculations. Take an hour to sit down and subtract all bills and expenses from your monthly net income. Look at what you have left for the month, and see how much you’re willing to spend on a mortgage payment. Try not to spend all that is left from the remaining balance.
Weigh your options of lenders. You’re now ready to compare lenders. Freddie Mac states that mortgage borrowers can potentially save an average of $1,500 from their loan just be getting a second rate quote from a lender. The average bumps ups to $3,000 if you get five quotes. You’re going to want to find a lender you feel comfortable with, and contacting multiple lenders will also help you find a lender that you can easily communicate with. To get a personalized rate quote from Align Credit Union, contact one of our Mortgage Originators.
Go through the pre-approval process. To get accurate loan pricing, you need to get pre-approved. You’ll understand what you’ll be able to afford, and it substantially helps reduce the headache of the entire process. Being pre-approved makes it easier for realtors to find you a home because you have documentation saying you have the money through your institution. Please be aware that lenders are allowed to check your credit at any time during the homebuying process. If you take out new credit, drastically change your finances, or leave your job, you might lose the home you’re hoping to purchase due to changes of the conditions listed in your pre-approval.
Thoroughly read over your mortgage documents. When you’re handed the final documents at the end of your journey, make sure you read them carefully. The monthly payments, interest rates, downpayment amount, and other fees given during your pre-approval should be similar to where they are now. If you see a noticeable difference, do not be afraid to ask your lender why the cost changed. It could just be a mistake that would have cost you a large chunk of money.
Get pre-approved for a mortgage at Align today!
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