Before you go shopping for that new beach home, save yourself a lot of headaches by getting pre-approved for a mortgage with a reputable company.
Select your mortgage company. The mortgage lending business is hyper-competitive and mortgage originators come in all forms of education, training, experience and affiliation.
The web has exploded with “discount” mortgage financing options offering fantastic terms and lightning fast closings but often at the expense of good old-fashioned customer service.
At the end of the day, your mortgage loan will be originated, processed, approved and closed by people. Software and institutions are the platforms that allow individuals to do their jobs, but at the risk of treating customers as a number.
Bank of England uses in-house underwriting with real people who work in the same office as your loan officer. Remember, you are choosing a company to help you with the single biggest financial decision you will likely make, so it is important to select a company you can trust who will view your transaction with the same level of importance that you do.
Sub-primes may be history, but you’ll probably still be shown homes you cant actually afford. By getting pre-approved as a buyer, you can save yourself the grief of looking at houses you can’t afford. You can also put yourself in a better position to make a serious offer when you do find the right house. Unlike pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history. By doing a thorough analysis of your actual spending power, youll be less likely to get in over your head.
Choose your mortgage product carefully. Used to be the emphasis when it came to mortgages was on paying them off as soon as possible. Today, the debt the average person will accumulate due to credit cards, student loans, etc. means its better to opt for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good. Additionally, when picking a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. If you plan to stay in the house for a long time and given the current real estate market, you should taking the points will save you money.
Do your homework before bidding. Before you make an offer on a home, do some research on the sales trends of similar homes in the neighborhood with sites like Zillow. Consider especially sales of similar homes in the last three months. For instance, if homes have recently sold for 5 percent less than the asking price, your opening bid should probably be about 8 to 10 percent lower than what the seller is asking.