With the new year upon us, now is a great time to clean up your financial household and apply a few simple steps to make yourself more appealing to lenders for home loans. Whether you are a first-time homebuyer or someone looking to move up or scale down, these helpful tips are for you.
First, when preparing to buy a home, consumers should check their credit report and credit score. It is important to make sure that there are no inaccuracies, and, if there are, to work with creditors to remove incorrect information.
Another important tip is to watch your credit card debt. Resolve any credit disputes or delinquencies and cancel any unused cards. Other tips include:
• Avoid making large credit purchases, such as a new car, boat, vacation or furniture. Doing so can
reduce the amount of money for which you may be eligible in a home loan.
• Develop a monthly budget to determine what you can realistically afford. Be prepared to make
appropriate spending adjustments for the additional maintenance and improvement expenses that
come with owning a home.
• Save money. Purchasing a home can include many costs, such as the down payment (ranging
anywhere from five to 20 percent), closing costs and inspection fees.
• Determine what price range you can afford and the monthly payment amount using online loan
calculators. The calculators can also help determine whether it is time to refinance your current home
• If you are a first-time homebuyer, attend a first-time buyer’s seminar. You can contact your home
loan lender to see what classes may be available.
• Work with a lender to determine your available loan options. Fixed mortgage rates are now low and
provide a set payment amount over the life of the loan. Pre-qualification for loans can help you
determine the price range of homes you can afford.
• In today’s financial environment, it is very important to work with a company that can aptly address
a homeowner’s specific home loan needs and desires.
Where you get your home loan matters—it’s not just about the rate. Homeowners should choose a lender with a solid performance history for making smart loans—a lender with reputable lending practices who is accountable for the loans they make.
There are several questions customers should ask in order to help them choose a lender.
• Will you take time to find the right loan option for me?
• Who prepares the loan documents?
• Who regulates the lender?
• Will the lender sell either the loan or servicing of the loan, and if so, to whom?
Whether a mortgage customer is buying a new home or refinancing, taking the time to research and feel comfortable with lender options is worth the effort.
Beyond speaking with the particular lender, prospective lenders perform a little investigative work, such as consulting the Better Business Bureau to verify if a lender is in good standing and to find out if any complaints have been filed against them. It is also prudent to check with a title company to see if the lender has a reputation for increasing rates or fees at closing or if they are aware of any unethical or fraudulent behavior on the part of the lender.
Homebuyers need to look for a lender that offers personal, one-to-one service to address their home purchasing and refinancing needs. Spring is the start of the buying season, so taking the right steps now can put you in a competitive position for the home you desire. TPW