How To Keep Your Finances In Check To Prepare For Buying A Home

There’s so much to consider when to comes to buying a new home. The first issue is that of your finances. You need to make sure that you’re preparing financially for the home search, and not just making your list of “wants” for a new home. It’s an exciting time when you’re purchasing your first home, but don’t let the excitement overtake your responsibility. Here’s some tips to keep you on the financial straight and narrow path when preparing to buy a home:

Be Mindful Of Your Credit Score

There’s many factors that can affect your credit score. Applying for new credit cards is one of those factors. Your credit score will drop a few points every time you have a new credit inquiry or open a new account. If you do get approved for new credit, lenders may have concerns that you’ll spend up maxing out your new approved credit limit on that account and possibly default on your loan.

Closing credit accounts is another factor that greatly affects your credit score. You may think that closing unused accounts is a good idea to help get yourself financially ready for becoming a homeowner. This isn’t true. Closing accounts lowers your amount of overall available credit. This means that your debt-to-credit ratio is larger. This lowers your overall credit score. You can certainly make these smart financial changes after you close on your new home.

Keep Records

When you move your money around, make sure you have records of it. Your lender will want to know about any unusual deposits and withdrawals. You’ll need to prove where your money comes from. All of the cash that you’ll be using for your home purchase should be in one account before you apply for a mortgage.

Keep Up With Your Bills

Don’t increase your debt. This will have an affect on the very important debt-to-income ratio which is one of the most vital aspects of loan approval. Also, be sure that you don’t skip your payments on bills. Your history of payments is incredibly important as well. Be sure that you continue to make full, on-time payments on all of your bills.

Keep Your Job

Even though a new job could mean a raise, or a better situation for you and your family, it could delay you in getting a mortgage. You’ll need to have your employment verified along with pay stubs to prove your source of income. Lenders like to see a longer employment history.

Keep Saving

The biggest up front costs in buying a home is that of closing costs and the down payment. Those must be paid at the time of closing. Lenders may even verify that your savings is on hand. Keep saving steadily and be sure to keep your savings in place.

How to Secure the Best Possible Mortgage Rate

Securing the best mortgage for your home may seem challenging, particularly for those who are first-time homebuyers. Fortunately, we’re here to help you get the best possible mortgage rate, regardless of the real estate market.

Here are three tips that you can use to get the best mortgage rate at any time:

1. Find Ways to Improve Your Credit Score.

Your credit score likely will influence your mortgage rate. However, those who track their credit score closely can improve this score over an extended period of time. That way, when the time comes to secure a mortgage for a new home, you’ll be in great position to get the best mortgage rate possible.

Try to check your credit score regularly. You can do so quickly and easily, as you’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies (Equifax, Experian and Trans Union).

To improve your credit score, focus on paying off any outstanding debt. This will help you enhance your credit score without delay.

2. Take Advantage of a Shorter-Term Mortgage.

Although you may consider a variety of mortgage options, a shorter-term mortgage may allow you to pay a lower mortgage rate for a shorter period of time.

Remember, just because you choose a 15-year mortgage over a 30-year mortgage does not mean you will wind up paying twice as much for your mortgage payment each month.

For example, selecting a 15-year fixed-rate mortgage over a 30-year fixed-rate mortgage may prove to be a viable option for many homebuyers.

A 15-year fixed-rate mortgage will have higher principal and interest totals than a 30-year counterpart, while the insurance and tax fees associated with both types of mortgages will remain the same.

3. Look at All of the Lending Options That Are Available.

It sometimes can be overwhelming to look at all of the banks, credit unions and other lending options that provide mortgage assistance. Diligent homebuyers, however, will dedicate the time and resources necessary to explore all of the lending options at their disposal to make an informed decision.

Ideally, you should try to get multiple quotes from a variety of lenders. This will enable you to see exactly what each lender has to offer and improve your chances of making the best decision possible.

Lastly, don’t forget to lock in your mortgage rate in writing. By doing so, you’ll be able to verify you have the mortgage rate you like and the loan you need to secure your dream home.

Understanding the ins and outs of landing the ideal mortgage rate can be difficult. And if you ever have concerns or questions along the way, your real estate agent may be able to point you in the right direction as well. Because this agent boasts comprehensive real estate sector experience, he or she may be able to provide guidance and tips to ensure that you can find a reliable lender and land a great mortgage rate.

Find a mortgage rate that works for you, and you may be able to save money over the life of your mortgage.

What is a Jumbo Loan?

Are you looking to buy a bigger home? If you are looking to make the move a jumbo mortgage might be right for you.

A jumbo mortgage is a home loan with an amount that exceeds conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO) or better known as Fannie Mae and Freddie Mac. Currently, the loan limit is $417,000 in most parts of the United States, but can increase to $625,500 in the higher cost areas. OFHEO sets the conforming loan limit size on an annual basis.

Jumbo loans have slightly higher interest rates because they carry more credit risk.