How to Get the Best Mortgage

How to Get the Best Mortgage

If you are planning to buy a house, you'll probably need to get a mortgage to pay for it. While some buyers can pay cash for their homes, most need a bank loan to finance this important purchase. Getting this crucial loan isn't as simple as obtaining a car loan. Bankers scrutinize borrowers closely to make sure they can pay back the money and that the house is a wise investment for the bank. Buyers need to do their homework to make sure they get the best interest rates and payments for their purchase. It's wise to follow these steps to obtain the best loan.

Preapproval Process 

Step one in the mortgage process is getting preapproved for the loan. Before even looking at houses, it's smart to have a lender check over your application. Many realtors won't take buyers to look at houses until this important step has been completed. Sellers usually won't accept an offer unless they know the bank has preapproved buyers. In order to be preapproved, your lender will want to look at your credit score, your debt-to-income ratio, and your employment history. You'll need to have a decent credit score to get a loan with the best interest rates. You'll also need a stable employment history that shows you've been with the same employer for at least two years. Once you've been preapproved, you can find the house of your dreams.

Interest Rates 

Interest rates change all the time but once you begin the mortgage process, you can lock in your rates. You can also buy down your rate by paying additional fees called points at closing. Doing the math on various options will let you know if this is a wise choice. The better your credit score and employment history, the more likely it is that you'll get the lowest rates on the market. Check the Internet to compare rates between different lenders, as different banks offer slightly different rates. Remember that the lower the interest rate, the lower your payment will be.

Length of Loan 

You'll also need to decide whether you want a thirty-year or a fifteen-year mortgage. A thirty-year loan will give you the lowest payment but you'll pay lots more interest over the life of the loan. If you can possibly afford to, opt for the fifteen-year loan if you plan to stay in your house for a while.

The mortgage rates and length of loan will play a huge part in your financial wellbeing. This important loan is on your most important asset: your home. Be sure to choose a lender with a good reputation, that has been in the business for a while, and that offers great rates.



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