3 Things You Need To Know About Getting A Mortgage For The First Time
If you are considering buying a house, you are probably looking into getting a home loan. If this is your first time purchasing a home, the mortgage process may seem overwhelming to you. Luckily, there are some things you can do to simplify the process and ensure you are getting the best loan possible. Here are some tips.
1. Shop Around Before You Choose a Lender
Before you commit to a lender, it is important to shop around to find the right lender for you. Although all of the lenders will require similar documentation to prove income and be approved for a loan, they will all have different incentives for choosing them. For instance, one of the main factors you should consider is the interest rate. The interest rate will greatly affect how much you will pay each month and the overall amount you will pay over the life of the loan. Thus, it is very important that, before you accept any loan, you look at who can give you the best interest rate. In addition, ask about closing costs. Some lenders will pay your closing costs, some will absorb the costs into the loan, and others will have you pay the costs out of pocket. All of these things should be considered and discussed with the lender.
2. You Can Have the Lender Estimate the Loan Without Pulling Credit
You should know that pulling your credit score hurts it. Your credit score will make a big difference in how much you pay in interest and can improve your chances of getting approved for the loan, so you should be very careful about having multiple lenders pull your credit score. Instead, you can have the lender generate an estimation based on numbers that you give them. For instance, if you know your credit score, have the lender give you an estimate based on that score. If you decide to go with them, you can get a hard credit pull to find the exact number.
3. Don't Get the Loan Approved Too Early
Lastly, you should wait to apply for the loan until you are close to closing on the house. If you have the interest rate locked in too early, you may have to pay penalties and have your interest rate raised. Thus, wait until you have a hard closing date before you get the mortgage finalized.
Ask your mortgage company for additional reading on home loans.