Buying a home is the most important financial decision you will make in your life. Getting the best possible loan and avoiding common mistakes takes knowledge and experience. Between career and family, who has time to study everything there is to know about mortgages?
Luckily, there are services like the Mortgage Professor who are offering their decades of experience to answer your questions and guide you as you shop for a loan. With a trustworthy source of the best information, you will no longer have to rely on a salesperson. You can empower yourself to get a loan with the best possible terms.
What Is A Mortgage Shopper?
A mortgage shopper is anyone who is planning on buying a home, trying to improve the terms of an existing loan, or borrow money on their home’s equity. Mortgage shoppers may include;
- First-time buyer
- Homeowner looking to lower payments
- Homeowner looking to lower total costs
- Homeowner with payment problems.
- Homeowner considering a reverse mortgage
Why Shop For A Mortgage?
Rates and terms don’t seem to vary too much from lender to lender. Still, a small fraction of a percent can mean a lot of money over the years. Also, some costs are applied at the beginning of the loan. You wouldn’t want to pay a mortgage broker $10,000 to process a refinance that other lenders will offer for free.
The marketplace for mortgage lending has gone through big changes in recent years. This includes major changes in the laws resulting from the mortgage crisis of 2008. Even a homeowner with experience obtaining a mortgage could be unaware of a great new program.
It is essential to get the right loan for you. Many of the options for mortgages are tailored for a certain type of buyer. For instance, if you plan to own a home for only a few years, an adjustable-rate mortgage could save you some money. Those savings, however, may entice long term buyers to make a bad decision and get stuck if the rates and payments start to go up.
How To Shop For A Mortgage
There are many sources for mortgages. Go ahead and learn about the lending landscape before you make a decision.
Bank or Credit Union
You can start by going to your own bank. They may offer good rates and be able to refinance at a low closing cost. It would be very time consuming to shop around by applying at several different banks.
This a very common way to get loans because a broker can shop around for the best deal. They make their money off the closing costs, so you must be sure these costs are not too high. Also, mortgage brokers have earned a sketchy reputation for using high-pressure tactics and giving out bad advice. Finally, you must get all promises in writing.
New technology has created another option for shopping for a mortgage. These websites allow borrowers to manage the process themselves. You can shop without giving all your personal information away. When you are ready you can get pre-approved across a wide variety of lenders. Loan prices and terms are updated in real-time and the quotes should include all the costs.
How Will Mortgage Professor Help Me Shop For A Mortgage?
You work hard for your money. It is important to get the loan that is right for you at the best possible terms. Here are some ways to avoid extra costs when you shop for a mortgage. With the Professor’s experience and knowledge, you will learn to avoid mistakes that will waste your time and cost you money. Here are some common mistakes made when shopping for a mortgage.
Shopping Before Figuring a Budget
If budget is a problem you are more likely to be offered sub-prime loans with higher costs. Learn about requirements for income and debt so you know how your budget will look. You also need to know how much down payment will be required.
Assuming Your Existing Lender Has The Best Rates
Your lender doesn’t really gain anything by refinancing you at a better rate. They want to keep your business, but a new lender is highly motivated to gain new business. That means you may get a better offer and you almost certainly will get better service.
Focusing On Monthly Payments
While the budget is very important, mortgage lenders tend to sell the payment. If you are paying less each month, it is not necessarily saving you in the long run. Especially if that $100 less in monthly payments means you will be paying for an extra 5 years. Always compare the total cost of the loan.
Fixed Rates Vs. Adjustable Rates
A great rate and a great payment amount sounds great, right? If the rate is adjustable, you may find that payment and rate going up significantly. When rates are low, as they have been in recent years, it is usually best to get a fixed rate.
Closing Your Credit Cards
There are no shortcuts to improve your credit score. Consolidating credit cards can hurt too. What matters most is that you have a few cards with balances well below the approved limit.
Taking Care of Bad Credit
If you have delinquencies, don’t close the account. Keep making payments on time to improve your score. Pay off old collection accounts now, don’t wait until you are shopping for a loan.
Neglecting To Consider All Options for Refinance
A second mortgage or a home equity line of credit with a fixed rate option may be a better way to consolidate debt than refinancing the entire home loan.
Get A Great Loan That Is Perfect For You
Get Educated! In order to know what is important and tune out all the distractions, you need a good source of information. This is why using a service like the Mortgage Professor is so helpful. Be empowered to make the best decisions for you and your own future.
With the help of the mortgage professor, you can learn from the mistakes of the others and use that knowledge to take charge of your financial well being. There are great low rates available today. You have the power to find the perfect loan for you.