| -- End Ad Box ---> | | | | lender it can be tempting to simply choose the |
| You know the old saying, buying a home, and getting a | | | | institution that offers you the lowest rates, but |
| mortgage, is the most important financial transaction | | | | it’s wise to be aware of the fact that |
| most people will make in their lives. It’s a | | | | unscrupulous companies have no intention of actually |
| cliché, but it’s definitely true. Get the wrong | | | | giving you the low rates they advertise. It’s |
| mortgage and you may find your finances spiraling out | | | | much more important to choose a trustworthy lender |
| of control and into trouble. The right mortgage, on the | | | | who is willing to answer your questions and help when |
| other hand, can make homeownership much easier | | | | you need it. |
| (and less of a strain on your finances). With this in mind, | | | | Buy Points: Most lenders offer points as a |
| here are some quick mortgage tips for first time home | | | | means of allowing you to buy down your interest rate. |
| buyers. | | | | This can be an excellent way of saving a significant |
| Before you Apply | | | | amount of money over the life of your loan, but the |
| Preparing to apply for a mortgage is perhaps the most | | | | money you pay for points has to be paid in cash at |
| important step in actually getting the loan. Preparation is | | | | closing, so make sure your cash flow can cover this. |
| all about tidying up your finances, and making sure your | | | | Also note how much the lender is charging per point |
| credit is in order before you start contacting lenders. | | | | — in some cases, points can cost more than |
| Fix your Credit: Your credit rating is one of the most | | | | you’d save over the mortgage term so buying |
| important factors that lenders use to determine how | | | | points doesn’t always make sense. |
| much mortgage they’re willing to lend you, and | | | | Lock in your Interest Rate: Locking in a low interest |
| what your interest rate will be. If your credit is in poor | | | | rate can save thousands of dollars over the life of a |
| shape, you can expect a higher interest rate, and very | | | | loan, but trying to ride the market waiting for it to |
| poor credit may even prevent you from obtaining a | | | | bottom out can be risky. Don’t wait too long to |
| mortgage at all. To start fixing your credit, pay bills on | | | | lock in your interest rate, and pay very close attention |
| time and check your credit report for errors. Make | | | | to the market, or you may end up with a higher |
| sure your credit is in good shape before you start | | | | interest rate than you can afford. |
| applying for loans. | | | | Investigate Hidden Costs: Closing costs, which typically |
| Evaluate your Finances: This part of the process is all | | | | cost between three and five percent of the value of |
| about determining how much mortgage you can | | | | the home, are payable in cash when you close on the |
| afford. Make two lists: one of your monthly income, | | | | house. When you receive your Good Faith Estimate |
| and one of your monthly debts. This will help you figure | | | | from your lender, check it thoroughly for hidden |
| out your budget and how much you can afford in | | | | expenses, such as document delivery fees and |
| mortgage repayments. Of course, these are only | | | | processing fees. If you’re careful you can save |
| preliminary figures, but it’s good to know where | | | | hundreds of dollars in hidden costs by negotiating with |
| your finances stand before you start talking with | | | | your lender, which means less cash to pay at closing |
| lenders. | | | | time. |
| Choose your Mortgage Type: Fixed rate mortgages | | | | Tips for Closing |
| aren’t always the best option. If you’re | | | | Closing can be tricky too, especially if issues arise at |
| only planning to live in the home for a few years, you | | | | closing time that weren’t apparent previously, |
| may find an adjustable rate mortgage is more | | | | such as the need for home repairs. These types of |
| affordable. You can always refinance to a fixed rate | | | | problems shouldn’t affect your mortgage, |
| mortgage if you decide to stay in the home | | | | however. |
| permanently. | | | | One aspect of closing that can affect your mortgage |
| The Application Process | | | | is the date on which you close. This is because when |
| Applying for a mortgage is a fairly complicated | | | | you close, you must pay in cash the pre-paid interest |
| process. For first time buyers there are several | | | | that accrues on your first mortgage payment. This |
| important points to be aware of. Here are a few tips | | | | cash payment covers interest from closing time until |
| to help you get through the application process. | | | | the time you make the first payment. |
| Choose a Lender: When you’re choosing a | | | | |