The following five simple yet ingenious tactics will help in making your home loan and home buying experience a better one that will yield positive results.
1. Apply for your home loan as early as possible
There have been reports that The Federal Reserve plans to stop buying mortgage-backed securities by the end of March. Many mortgage analysts feel that the added risk will precipitate higher interest rates which means that low rates will be a thing of the past. Don’t miss out on this huge potential savings.
2. Take a close look at your credit report before your lending expert does
Now would be the perfect time to look carefully into your credit files. If there are any errors located on your credit report, correct them now before your lender sees them.
If you are looking to attain the best interest rates and lower fees, banks will expect a FICO score of 740 or higher. Anything less than 620 will definitely become a financial hurdle in getting your loan done.
3. Down payments are playing an important role in getting a loan
Due to more and more borrowing restrictions, most lenders require buyers to put at least 10 percent down. This will benefit you with lower interest rates when doing a refinances or purchase. For consumers that don’t have ten percent down, an FHA-insured mortgage with a needed 3.5 percent down may be an option.
For those who do not have a down payment, then perhaps look into a VA loan or the U.S. Department of Agriculture’s Rural Housing Service loan. Neither federal programs require a down payment when you qualify.
4. Try this when refinancing your home
Most mortgage owners automatically think they must start all over again with a brand new 30-year mortgage when refinancing. But this is not always the case. Ask your lender or mortgage broker to amortize numbers allowing you to refinance with the remaining amount of years on your old loan. You will probably save even more money. Of course, all loans will vary with the situation at hand. Only those who are under financial strain and need a considerably less low monthly payment should consider starting over with a new 30-year loan.
5. Tax credit or no tax credit, that is the question
The extension of the home buyer’s tax credit would logically be a great reason to move forward with your impending home purchase decision. The savings are quite attractive. Now having said this, be careful as to not rush into an unwise buying decision. These savings should be a “bonus” and not the deciding factor.
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Keep in mind that staying balanced in this matter is as equally important as not missing the tax savings and lower interest rates which may not happen again any time soon. For those savvy home buyers who follow these five proven home buying tips, you will have a far better buying experience and undoubtedly receive one of the better home loans. Now for consumers who may be lacking in the credit score department, sit down and start working on raising your score by proactively removing errors on your credit report and by lowering your debt.
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