Mortgage rates dos and don’ts
Unless you are financially able to purchase a property outright, securing a mortgage is the only way to
achieve home ownership. Here are some do’s and don’ts when it comes to a mortgage.
1. Pay your bills on time and cut down on any debt. Credit scores are crucial. Your credit score will determine if you are able to get a loan and your interest rate.
2. Save now for a down payment. It’s no secret that the more you are able to put down, the less you have to borrow. However, it is important to note that it may make more sense to pay off high interest debt first. In other words, pay off your credit card debt and settle for less of a down payment because your mortgage interest rate should be less on the property loan.
3.Shop lenders. Compare interest rates and closing costs, such as application fees and appraisals. Learn about the different types of mortgages before meeting with lenders.
1. Don’t make any large purchases or career changes right before the closing. Your lender will recheck your employment status and credit profile again shortly before the closing.
2. Get pre-approved for a mortgage, not just pre-qualified. This will expedite the home buying process and give you negotiating strength and credibility. Sellers will sometimes accept lower offers from qualified buyers, who can show they can close the deal.
3. Don’t get in over your head. Borrow what you can afford, not what the lender is willing to lend. Scrutinize your budget and factor in property taxes, utilities and maintenance.
Some buyers find themselves contemplating the purchase of a short sale, a property that sells for less than the balance its owner owes on the mortgage, despite the possible added complexities. If this is something that you are considering, please take note:
Pro: A major advantage to purchasing a short sale property is the price. Banks do not want a property to go into foreclosure, which is usually the next step if a short sale property fails to sell. Often buyers can purchase a property for under the market value.
Con: The disadvantage of buying a short sale is that it can be a very lengthy process. Short sales often take significantly longer than normal closings due to the amount of people involved in the transaction. The bank employs negotiators to get the maximum amount for a property and once the negotiator approves, a supervisor must review the package. You may wait for months while your offer is evaluated and the lender may reject your offer, even after having had the paperwork for a long period of time. If you do not have a flexible time frame, a short sale probably isn’t for you.
Recommendation: When shopping short sales, remember to work with a qualified real estate agent who has experience with short sales. Short sales can be complex, so it helps to ask about experience and success with short sales and familiarity with the process and lenders.
Consult with me if a short sale is right for you.