Mortgage rates are still near the bottom, but housing prices are beginning to recover and rise. If you are in the market and are looking now is the time to strike. When you are getting prepared to purchase a home make sure you get yourself pre-approved for a home loan to know what you can afford in the marketplace.
Tip 2: Shop for a Low Rate and Good Service
Even with rates roaming near record lows, you should still take the time and do your due diligence to shop for the best mortgage deal. Get quotes from at least three lenders and compare not just the interest rate but closing costs and the quality of their service. Favor lenders that have a reputation of closing on time. Start with referrals from friends and relatives when shopping for a lender and read online reviews from other borrowers about the particular lender or mortgage broker you are considering.
Tip 3: Ensure that Your Credit is Golden
If you are planning to get a mortgage in the near future your Credit Score is an asset. There will be new rules in 2013, but there is anticipation the rules will get loosened. Most lenders still want to see a spotless credit history of at least one year on your credit report. You'll need a credit score of at least 720 to get the best possible rate. Borrowers with a credit score of 680 or more can still get a good deal, but the lower your score, the harder it will be to get approved.
Review your credit report before you apply for a mortgage. Sometimes, paying part of your credit card balances can boost your credit score quickly. Generally, if you are using more than 30 percent of the available credit on your cards, you may be hurting your score. Also, make sure to review your credit and check for credit errors and have them corrected before you apply for a loan.
Tip 4: FHA vs. Conventional Loans Why Compare
Many homebuyers choose to use the Federal Housing Administration mortgage because it makes home buying easier with only requiring 3.5% down payment. With the number of FHA fees an FHA loan is a bit more costly than perspective buyers anticipate and in 2013 the fees will rise again. With the associated costs of FHA mortgages rising, it may me be more intriguing for buyers to look at a conventional loan and save a little bit more for a conventional loan. Buyers looking for a conventional loan need at least 5 percent down to get a conventional mortgage that is depending on their credit. If you can afford the slightly higher down payment, get quotes for FHA and conventional loans, and compare the costs.