First: Find the right lender
Finding the right lender can be challenging and can also require some legwork when considering what is important to you when seeking financing. While interest rates are often a driver of decision, there are other factors such as fees, location, willingness to work with non-traditional properties, what happens after the loan closes, and the people you will work with that can make the process easier. Local realtors and other recent homebuyers are often good sources of reference for lending options.
Second: Check your credit report and work to improve it or keep it stable
Knowing your credit rating is an important part of the financing process and can affect the type of rate you may be eligible for. It is important to know what things can impact your credit rating. Excessive credit card balances, late payments, credit history and collections are all areas in which your credit score could be negatively impacted. You can, however, do things to improve your score such as paying down credit card balances, taking care of collections and catching up on late payments.
Third: Know your down payment options
Be sure to check with your lender on what down payment options are available. Do you need to put 20% down? Can fees be financed?
Fourth: Determine your budget
Knowing how much you can afford in a house payment, is often times different than what you are preapproved for. Establish a household budget so you know the appropriate price range of your new home.
You may also want to consider bi-weekly payments as a way to lower the amount of overall interest you will pay over the life of the mortgage. By setting up bi-weekly payments, you can cut 6 years off a 30-year mortgage.
Five: Obtain Life Insurance
Some lenders may require you to have life insurance at a value sufficient to cover the mortgage. Regardless of the requirement, life insurance can be important in ensuring your family’s future in the event of a tragedy.
