Debt Free

Due to the new sense of trepidation that banks and other lenders are approaching mortgage business with these days, it’s more important than ever to have your credit up to snuff when going after a mortgage or refinance. As many people have discovered in the last two months, the lender can get cold feet right up until your loan closes. To prevent this from happening to you, and to get the best rate on your mortgage, you should take these few steps before you apply for your mortgage or refinance. They will help you get a better mortgage or refi. 

Get a Better Mortgage Step #1 –
Get a copy of your credit report. Open it up and go through it with a fine toothed comb. Not only look for any inaccuracies, but look for any accounts that may be problematic in other ways. For example, sometimes accounts will be reported as unpaid even though you only owe about $5 on them.

Although technically not a credit report inaccuracy, an account showing as unpaid in this manner will have a derogatory effect on your credit and cost you money on your mortgage. This sort of thing happens when you pay the amount you think will close an account, but other last minute fees or interest is added to the account balance, and you are short. This points to the necessity of always checking weather an account is actually closed before moving on.

The good news is that banks are giving better rates to borrowers with great credit, even as they cut the legs out from other borrowers. Another reason to increase your credit score before you try for your mortgage.

Get a Better Mortgage Step #2 –
Now is a great time to try and get that raise you’ve been wanting. Do it before you apply for the mortgage. The added income will help in your debt to income ratio. Do not use the added income to try and get a larger, nicer home. Just use it to get a better mortgage. Do you really need slab granite countertops and Viking appliances? Well, maybe so, but that’s a subject for another day.

Get a Better Mortgage Step #3
Learn a bit about the home buying and mortgage lending process before you apply. If it’s your first home buying experience, find out what you can expect. Some knowledge will help you when you shop for your mortgage. Know what you should expect in the way of fees, interest rates, closing costs and so on. Find out who is a reputable mortgage broker in your area, check the interest rate at your bank, and look at what you’ll get at a comparison shopping service such as LendingTree.com.

Get a Better Mortgage Step #4
Negotiate with them. I know, it seems like they have all the power, but you’d be amazed how often you can get a better mortgage by negotiating. Ask for fees to be dropped or .05% lower interest rates. The worst they can say is no. They’re not going to be insulted or rescind their mortgage offer because you had the audacity to ask for a better rate or a lower fee. Even a small fee reduction or a few tenths lower interest will add up big time over the term of the loan. Remember, all those fees that are added in to the loan you will pay for over the entire term of the loan, meaning they will accrue interest you’ll have to pay for.

These four things will help you get a better mortgage. Remember, do your homework. The money you save will be your own.