Most first time home buyers make the mistake of shopping for their dream home first and considering finances later. Many assume that securing a mortgage provider is as easy as filling out an application, but this is far from the truth. Purchasing a home is a big time investment. If you’re going to need to apply for a home loan, then you’ll need to take your time in locating the right mortgage lender. Researching mortgage lenders is an important step to financing your home. You will be entering into a 20 to 30 year contract, and thus want to secure a loan through a service provider that best suits your financial needs. Below are a few suggestions on how to begin this process.
Know Your Financial Standing
Another common mistake that eager homebuyers make is not familiarizing themselves with their personal financial standing. They get ready to apply for a home loan and become overwhelmed when they receive denial notices or high interest rates. Or they purchase a home that is way more than they can afford. To prevent either frustration from happening to you, it is always ideal to first assess and understand your current financial standing.
Checking your credit report is one way to become further aware of your finances. When looking at your report, be sure to look at more than just your credit score. You want to check the history to make sure that there aren’t any negative ratings that might work against you when you apply for a mortgage. Any discrepancies should be disputed right away, and if there are any negative account balances, you should begin working out payment arrangements to get them back in positive standing.
Assessing your budget is the other way to determine your current financial standing. Create a budget that includes all of your current expenditures. Based on the money that you’re shelling out each month, what do you actually have left to afford a home?
Choosing a Mortgage Provider
Now that you have a better understanding of what your financial status is, you’re ready to begin searching for a mortgage provider. Remember, you’ll have a contract with the company for at least twenty years, with that being said, you want to do your due diligence in searching for the right mortgage company. This will include doing a background check to determine the company’s experience in the mortgage field, checking consumer reviews to see how others have experienced a particular company, and finally reviewing the various products they have and how they can benefit you.
Once you’ve compared at least three mortgage providers you are ready to request a quote. You may have to fill out an application for preapproval. Be sure to fill out everything entirely and also understand that your preapproval determination may slightly differ from the actual offer you receive.
Before Signing on the Dotted Line
After deciding which mortgage provider you’re going to select you will likely have to fill out a lot of paperwork. No matter how tedious the task might seem, it is suggested that you read everything in its entirety. You want to make sure that you fully understand the total cost of the home loan, your responsibilities, and other important factors before signing on the dotted line. Have your real estate agent or obtain an attorney to go over the contract with you for further understanding.
Financing your home might seem like a long drawn out process, but it is certainly worth it. Choosing a mortgage company is not something that should be taken lightly. It is also not something that should be done last minute or on a whim. Proper assessments, evaluations and comparisons must take place in order to protect your current and future financial circumstances.