The word “mortgage” doesn’t have to strike fear into your heart. For most people, a mortgage is the only way to make buying a home affordable, and when you find a house that you really love, a long-term loan of this nature no longer seems unreasonable. That doesn’t make it any less frightening to lock yourself into one of these contracts. Here are five tips to help you conquer your mortgage and get a great deal.
- Research your lender. Your lender is going to research you, so make sure you research your lender. You aren’t going to find any skeletons in the bank or broker’s closet, but you will get an understanding for that lender, who they are, who they work with, and if they’re right for you.
- Improve your credit score. Before going in to get a mortgage, you want to have the best possible credit. Taking active steps towards improving your credit, like paying down debt and making sure you pay your bills on time. This might not instantly improve your score, but it will show up on your report and prove that you’re committed to paying on time and in full.
- Be honest on your application. Don’t hurry through the application. Few people intend to be dishonest on the application and simply find that they’ve left something out or held something back because they were hurrying or because they initially believed it would cast them in a negative light. Withholding information can actually severely damage your chances of getting a good deal. Be upfront and honest.
- Be willing to make a sizeable down payment. The larger the down payment you make, the better deal you’re likely to get. This is because making a large down payment helps you appear like a safe investment for your lender. The safer of an investment you are, the less you’re going to pay over the life of your mortgage. If you don’t have a large down payment to make, you can still get a great deal—a large deposit just helps.
- Don’t just look at interest rates. If you are just focusing on the interest rate of the loan, you might be blind to other expenses or fees that can actually turn what looks like a great deal into a serious financial burden. Look at origination, underwriting, and preparation fees, as well as discount points when evaluating whether or not your mortgage is a good deal.