If you’re looking to buy a new house, especially for the first time, your best choice in terms of financing is to get a mortgage. A mortgage allows you to be able to get your dream home with a payment plan that you can afford. To help you come out with the best deal possible, here are our six tips to get the best mortgage deal:
Check the APR
The mortgage rate tells you about the money you are expected to pay each month, but it doesn’t give you the full picture of the value of the deal. Therefore, the first thing you should look at is not the mortgage rate, but the annual percentage rate. The APR includes the mortgage premiums, interest rates, origination fee, and closing fee. This will give you the full picture of how much can expect to pay in one year. Many lenders will give low yearly mortgage rate to lure people in and then hit them with all the additional fees.
Compare different options
Second tips to get the best mortgage deal is very important. You won’t have a clear idea about what a good mortgage deal is if you don’t have a lot of options to choose from. Each lender will offer you a different deal with various benefits and downsides. You need to be patient and find the one that fits best with your financial situation and preferences. Some lenders may give a low-interest rate but ask for an expensive origination fee and down payment. This may be a good idea if you have a large sum of capital you can spend up front, as this can save you a ton of money on interest. On the other hand, some lenders may not charge a whole lot of fees, but the interest rates may be through the roof. You need to take these things into consideration when you’re choosing a mortgage package for your dream home.
Look for a federal mortgage support program
The government wants people to buy more properties, as that will allow them to collect more taxes. The tax money will then drive the economy in the local communities up. You will find many government-funded organizations that can help you with your mortgage situation. For example, the Federal Housing Administration (FHA) has a mortgage program for veterans that allows you to pay as little as 3.5% for the down payment at an affordable interest rate. If you’re having trouble sorting out your mortgage situation, these federal or state organizations can help you, so don’t be shy to ask for their help.
Get a pre-approval
When you have your financial status pre-approved, it can help you to get a better deal from the lenders. Above all it can be used as evidence for your positive credit. Having your finances audited can also open up new doors. It can bring more beneficial mortgage deals, which give you more control over how you want to pay. This allows you to have more freedom over your financial situation for years to come. Filing for pre-approval is quick and easy, and there’s no reason why you shouldn’t do it.
For a deal with low down payment, you need to pay for insurance
Keep in mind that most lenders will require you to pay for insurance if your down payment is under 20%. Also they expect you to pay for the insurance for at least several years into the future. When your down payment is low, the lender will have to take on quite a bit of risk. So they want something to use as compensation if you’re unable to pay off your mortgage. Once you’ve paid off a significant amount, the lender may allow you to put the insurance on hold.
Don’t use your credit before the approval of application
If you’re planning to use your mortgage credit, be sure about one thing. You need to wait until you have the green light from the lender before you submit the credit. Regardless of how great your credit score is, there’s always a chance that your application may be rejected. Also, the process of reclaiming the mortgage credit can take a while. You don’t want to get caught up in this process. Thus, it’s better to submit the credit after your application has been approved.