Mortgage Do's and Don'ts

Here is a statistic that may shock you: almost 30% of homes purchased are cash deals. Higher than you thought, right?

However, for the rest of the buyers, securing a mortgage is the most popular way to achieve home ownership. Here are some do's and don'ts when it comes to a mortgage.

Do:
Pay your bills on time and cut down on any debt. Credit scores are crucial. Your credit score will determine if you are able to get a loan and your interest rate. Many loan officers now have the tools to evaluate exactly what you can do to improve your credit score in real time!

Save now for a down payment. It's no secret that the more you are able to put down, the less you have to borrow. However, it is important to note that it may make more sense to pay off high interest debt first. In other words, pay off your credit card debt and settle for less of a down payment because your mortgage interest rate should be less on the property loan.

Shop lenders. Compare interest rates and closing costs, such as application fees and appraisals. Learn about the different types of mortgages before meeting with lenders. You would always get a second opinion when shopping for a car, right? Do the same with your mortgage!


Don't:
Don't make any large purchases or career changes right before the closing.
Your lender will recheck your employment status and credit profile again shortly before the closing. If they are not satisfied, they can pull the plug just when you are about to close on the house of your dreams.

Get pre-approved for a mortgage, not just pre-qualified. This will expedite the home buying process and give you negotiating strength and credibility. Sellers will sometimes accept lower offers from qualified buyers, who can show they can close the deal.

Don't get in over your head. Borrow what you can afford, not what the lender is willing to lend. Scrutinize your budget and factor in property taxes, utilities and maintenance. For condominiums and planned unit developments (PUDs), do not forget to factor in the monthly association fees!

It seems daunting at first to find out exactly how much you can afford. What if it isn't as much as you thought? I believe that the sooner you know, the better. If your credit score isn't where it should be, you are now in a position to do something about it. Take charge of your finances!

Please contact me if you would like more details on mortgages or on any other real estate related subject! If I don't know the answer, I will strive to find someone who can!