Securing the Best Mortgage

By Joe Raquiza MLO # 114206 | Company # NMLS

81395 | WA CL-81395

1. Have your credit report readyAt least once a year, review your credit report and make sure that everything’s in order. If possible, get a credit report at least six months before applying for a loan, so you can have enough time to review it fix any possible errors.

2. Improve your debt-to-income ratioIf you apply for a loan, lenders will take into consideration how much money you make versus how much you owe. Try and reduce your debt or increase your income, through such methods as making bigger payments on credit card debt and paying off outstanding loans.

3. Plan for a big down paymentTo take advantage of bigger loans, smaller interest rates and better closing fees, you should save up for the biggest possible down payment. This also helps lenders determine the loan-to-value ratio of your property.

4. Choose between a fixed or hybrid mortgage

If you don’t think you’ll be in your home for too long, then a hybrid loan might be a better idea. This nets you a lower interest rate for the fixed period than a typical, 30-year mortgage. But since plans can change, there’s risk with a hybrid mortgage, and interest rates could spike if you end up staying in a home longer than intended. If you’re uncomfortable with such a risk, a more traditional mortgage might be a better idea.

5. Shop for lendersThe right lender can make or break your mortgage experience. Take the effort to find a straightforward lender who can work closely with you. Real estate agencies tend to suggest an affiliated leading bank, but making a decision solely based on a recommendation from an agency isn’t always a good idea.

6. Submit a thorough applicationGive your lender all necessary documentation to quickly and accurately process your application. The forms aren’t too difficult to fill out, and your lender will be able to do most of it.

7. Lock in your interest rateBy the time you’re ready to make a commitment on a mortgage, you have several options. You could opt to lock in your rate immediately or float it. In the latter case, your rate moves with the market, and while you could end up paying a lot less, you also risk paying a lot more. Buying a home is an important thing, so you need to make sure you’re following the proper steps.