Congratulations to you now that you have decided to buy a home for your family. The biggest problem lies in obtaining the finance for the property that you have shortlisted for buying. If you think
you know everything about what to do and what to avoid when applying for a mortgage loan, here is a list of 5 things that are an absolute must for you at this time. Mortgage Companies
- Check your credit (and take steps to fix it)
Do not be overconfident about your credit score. It is a good idea to obtain a recent credit report from a credit rating agency if you do not want to face surprises when applying for a mortgage loan.
Go through the report and try to fix the score if you find it average or below average. Your credit report is the most crucial document that forms the basis of decision by the lender to approve your
mortgage loan (and also the rate of interest)
- Observe fiscal prudence during the process
The loan manager at the bank not only takes a close look at your credit report but he also pays attention to your fiscal behavior during the process of approval. Do not buy anything big like a car or
expensive jewelry, do not lend money, do not switch jobs, and continue to pay your bills on time before and during the time when you have applied for a mortgage loan. Do not quit your job before
the deal is closed. To be clear about what you can do and what you must avoid, keep in touch with your lender rep and do not forget to consult him on these matters. Mortgage Companies
- Understanding the real rate of interest
Lenders very cleverly advertise a very low mortgage rate but use another rate of interest when calculating your monthly repayments. You must be concerned with the APR or the annual percentage
rate rather than the advertised rate of interest. It is this APR that includes many other charges such as loan processing, loan origination and mortgage insurance. It is better to compare the APR
being offered by different banks rather than being lured by their advertised mortgage rates. Mortgage Companies
- Stack up all important documents
Applying and getting a mortgage loan can be a very tiring endeavor for a first time homebuyer. In particular, it is the never ending list of documents and paper formalities that need to be completed
that can torment a borrower. This is precisely why you should gather all important documents before applying for a mortgage loan from a lender. Make a file and collect the financial statements,
salary stubs, recent income tax returns and all other documents that can be asked by the lender. This helps in saving a lot of time and keeps you relaxed during the process.
- Don’t buy furniture or upholstery before you have moved in
It is natural for a borrower to feel excited by the prospect of moving in a new home. However, you should keep control over your feelings and resist the temptation to buy furniture and upholstery for
decoration of your new home. If you buy these things for cash, your account is depleted and you do not have enough money for down payment all the closing costs. If you use credit card, you increase
your monthly debt repayments, making you ineligible for the mortgage loan.