5 Practical Mortgage Shopping Tips
If you are in the market for a mortgage this summer, then there are some things you need to know. Being armed with knowledge is never a bad thing when making an important decision like choosing a lender. The recent housing slump has caused some serious changes in the mortgage lending market and these changers will affect each and every potential home buyer. Here are five tips for potential home buyers who are looking to secure a mortgage.
Be prepared for lending market changes
This is a different lending market than it was a few years ago or even a few months ago. Foreclosures and defaulted loans have cost the banks millions of dollars and they aren’t happy about. In order to pick up their losses and slim their risk, they are limiting who can get a loan. You should be ready for this. If you want to get a good rate on your mortgage, you need to up your credit score.
People with quality credit will find that the current rates are in their favor. Banks are looking to reward people who can make their payments. This is one reason why smart buyers are making their moves now with the market in such a funk.
Know your history
Nobody likes to be blindsided by their credit history. With this market placing such a high emphasis on credit scores, you should have a good idea of what your credit history is like before you even head to the banks. Don’t allow them to blindside you in this regard. Credit scores slightly over 600 that used to a little risky are now considered very risky. You might have to do some work on your credit in order to improve your score.
Getting a mortgage is like any other form of shopping. You wouldn’t buy a car without first checking out options, so why do that with your home loan? Get to work early on this “shopping” and make sure to get offers from a bunch of lenders. These banks will all offer different options for the loan and having these options will enable you to make a good, informed decision about your needs.
You should try to get at least three different offers for this mortgage. Check with family members or trusted friends to find out if they have had good experiences with any particular lender. Getting as much information as possible is paramount when getting a home loan.
You’ve got leverage
The slumping market might be bad for some, but it is good news for potential buyers this summer. These banks need your business badly, especially if you have good credit. Because of that, you have some bargaining power to use in negotiations. Don’t be surprised if bankers try to lure you in with nice incentives.
Haggle over that price
This isn’t used car buying, buy you can still negotiate the price of your mortgage with the lender. As I mentioned earlier, you have all of the bargaining power in this slumping market. Use that power to your advantage by stepping on some toes at the lending office. You can also use this to your advantage when negotiating the price of that new home. Sellers are desperate to sell investments that they see as slumping. Take advantage of this and cash in a good price.