1. Be prepared and know what things affect a loan.
It is important to know how much of a payment you can afford before you start looking for a new home. You should request a copy of your credit report and your credit score. (also known as FICO Score - a mathematical model created by the Experian Credit Bureau as a tool to use in evaluating the risk associated with lending you money) Your FICO Score is figured by a series of questions based on your credit report and your debt-to-income ratio. Knowing what is exactly on your credit report before you apply is a must. That way if there are inaccuracies you can get them straightened out before applying. If you have good credit & your monthly income is a lot higher than your monthly debt obligations you most likely will get approved at a lower interest rate. However, if your monthly income barely covers your minimum debt obligations, even if you have good credit, you may not get the lowest interest rate. Also how much you can put down for a down payment can affect your loan.
2. Research and shop around.
We have complied a list of tools that can help the loan process flow a lot smoother. One of the biggest mistake that most people make when shopping for a loan is they only contact one lender. Mortgages are kind of like shopping for a car. You can't go to only one car dealership and expect to find the best deal on a car. Mortgages, just like car prices, can be negotiable. Mortgage brokers often charge different fees and have different lenders they do business with. So by shopping for your loan with multiple lenders you can get the best possible loan.
Quick Links To Mortgage Tools
Glossary of Mortgage Terms
Types of Mortgages
Mortgage Calculators
Pre-Qualify For A Loan
3. Know what type of mortgage is right for you.
There are a lot of advantages & disadvantages to every type of mortgage loan. Please click here to compare the types of mortgage loans and the advantages and disadvantages of each one before applying.
4. Be comfortable with your mortgage broker.
One of the most common mistake that people make is that they don't spend enough time choosing their mortgage broker. Mortgage brokers are not all equal in expertise, experience, training & trustworthiness. Make sure that your mortgage broker appears to know what he is doing. You will want to feel comfortable with your mortgage broker and make sure they take time to answer all of you questions and concerns. If your mortgage broker can't answer all of your questions and concerns, or doesn't appear to know what they are doing, we would suggest finding a new mortgage broker. Remember there are lots of companies with lots of mortgage brokers that want your business. Make them earn it.
5. When making an offer know the best way to negotiate and win the bidding war.
When placing a bid on a home sellers don't always take the highest bid. Offer the seller the cleanest buy offer. The offer with the fewest contingencies such as selling your current home first is most likely to win the bid. Befriend the seller. People often want to do business with people they like. Last, but not least, get pre-qualified for a loan first. A letter from a lender saying you are pre-qualified for a loan will show sellers you can afford the home and you are ready to buy.
