27
Aug
By support
Home Mortgage Tips

Buying a New Home? Three Tips on How to Get the Best Mortgage Rate

Buying a New Home in 2015? Three Tips on How to Get the Best Mortgage RateBuying a new home is one of the biggest steps that a person can take. Prior to taking out a home loan, you want to ensure that you get the best interest rate for your mortgage. The lower your rate is, the less you’ll pay over the long run. In today’s blog post we’ll share three key tips that will help you get the best possible mortgage rate.

Tip 1: Look For Special Programs

The Federal Housing Administration, better known as the FHA, offers a program designed for those looking at buying homes. This program lets applicants apply for loans and get access to better interest rates. The FHA guarantees that loan and agrees to pay off the funds if the borrower defaults.

The USDA can also help those interested in purchasing homes in rural areas. This can include farmland, ranches and homes located in smaller towns across the country. The USDA developed this program as a way to increase the population in certain areas.

Other programs are available through HUD, especially for those who never owned a home before. HUD is intended to help new homeowners buy homes in underdeveloped and up-and-coming areas. There are also special programs open for those who work as teachers, firefighters and in other positions that help the community at large.

Tip 2: Request Quotes

Not requesting quotes is one of the biggest mistakes that new shoppers make. Did you know that your interest rate can drop by a few percentage points or more just by comparison shopping? Lenders use different criteria when determining who can borrow money and the amount charged, and comparing those quotes can help you get the best fit for your situation.

Tip 3: Improve Your Credit Before Applying

Speaking of credit, one of the biggest factors that determines your interest rate is your credit score. A credit score of 700 or higher will get you a better interest rate than if you had a score of 650 or less. Improving your score before applying is one of the best ways to get a good rate.

Paying down your debt is an easy way to improve your score, but you can also pay your bills on time to get a better score. To learn more about new home financing, improving your credit score and interest rates available to you, be sure to contact your trusted mortgage professional.

25
Aug
By support
Home Mortgage Tips

A Few Common Misconceptions About Mortgage Pre-Qualification

Mythbusting: Correcting A Few Common Misconceptions About Mortgage Pre-qualificationIf you’re shopping around for mortgages, you’ve probably heard about pre-qualification processes – or maybe even received a pre-qualification offer in the mail. Lots of prospective homeowners hold misconceptions about what exactly pre-qualification is and how it works, and it leads them to opt into poor mortgage deals.

But by understanding how pre-qualification works, you’ll be able to find the right mortgage for you – at the best possible rate. So what is mortgage pre-qualification, and what isn’t it? Here are three common pre-qualification myths that you may have heard.

Myth: Mortgage Pre-qualification Commits You To A Specific Lender

Many homeowners mistakenly believe that being pre-qualified for a mortgage commits them to a specific lender. In truth, being pre-qualified only creates an opportunity for a lender to work with you.

The pre-qualification process doesn’t involve any loan contracts and doesn’t require you to pay the lender. Few homeowners know this, but you’re actually not at all committed to any particular lender until you sign the closing documents.

Pre-qualification is also generally a free process, although some lenders will ask you to pay the $20 fee it costs them to check your credit report. Typically no lender will ask you to pay more than $20 during pre-qualification.

Myth: Rate Shopping Hurts Your Credit Score

Another common myth is that shopping around for the best rate will hurt your credit score as a result of having multiple credit checks done. Some lenders may tell you this is true in order to discourage you from checking out other lenders. But according to FICO, mortgage inquiries aren’t handled the same way that other credit inquiries are.

Mortgage pre-qualification may seem like something you don’t want during a house hunt, but in truth, it’s really just a small gesture lenders make in order to make the mortgage process faster and simpler. If you’ve been pre-qualified for a mortgage, you will still need to go through the standard application process before you’re approved. To learn more about the mortgage application process, or to apply for your new mortgage today, contact your trusted mortgage professional.

18
Aug
By support
Home Mortgage Tips

Understanding the “Adjustable Rate Mortgage” (ARM) and How This Type of Mortgage Works

Understanding the Adjustable Rate Mortgage (ARM)When applying for a new home loan, there are several different types of mortgage programs available to most applicants. While there are various home loan programs to choose from, the most significant difference between the various options relates to a fixed rate mortgage or an adjustment rate mortgage. Understanding what an adjustable rate mortgage, or ARM, is in comparison to a fixed rate mortgage can help applicants make a more informed decision about their mortgage plans.

What is an Adjustable Rate Mortgage?

A fixed rate mortgage is one with an interest rate fixed for the entire term length. This means that a home loan with a 30-year term has an interest rate that will remain the same for the full 30 years, and this also means that the mortgage payments will remain the same over 30 years. On the other hand, an ARM will have an adjustable rate that will fluctuate periodically over the life of the loan, and the mortgage payment will also fluctuate as a result.

How is an ARM Beneficial?

There are several benefits associated with an ARM. For example, the initial interest rate and related mortgage payment are typically lower than with a fixed rate mortgage. In addition, if rates decrease over the life of the loan, the mortgage payment will lower as a result without the need to refinance to take advantage of the lower rate.

Before Applying for an ARM

Before applying for an adjustable rate mortgage, there are a few points that the applicant should keep in mind. Just as the interest rate may go down over the life of the loan, the rate and the mortgage payment may increase. The loan applicant should ensure that the upper limit for the interest rate and mortgage payment will be affordable for their personal budget before applying for this type of loan.

Each loan program available to a mortgage applicant has its pros and cons, and this holds true for an adjustable rate mortgage as well. Understanding how each loan program works and what the benefits and drawbacks for each are can help an applicant make an informed decision when applying for a mortgage. Those who are interested in applying for a new mortgage for a purchase or a refinance in the coming days or weeks may reach out to a mortgage broker to inquire about the different loan programs available.