6 tips for selecting a mortgage loan
Realtor.com, a resource offered by the National Association of Realtors®, has some great tips about home financing, ideal for helping buyers and sellers educate themselves on the ins and outs of mortgages, closing costs and more. Here are 6 tips for getting the right mortgage loan for you.
- Figure out what you can afford. After getting an idea of the cost of homes in your area, gather together this information: monthly income and debts, living expenses and down payment saved. Using an online mortgage calculator like the one on Realtor.com, you can estimate what your mortgage payments might be. Guideline: your mortgage payment should be no more than 43% of your monthly income.
- Choose a mortgage type. Consult with your lender or an experienced Realtor® to see if you qualify for a VA loan, first-time homebuyer loan, conventional loan or a jumbo loan.
- Select a mortgage broker or lender. You can go directly to a lender to apply for a mortgage or you can use a broker who will shop for a mortgage in exchange for a fee. With a lender, you will do the legwork to shop for the right loan, interest rates and terms. With a broker, the broker will do the research for you and offer you suitable options.
- Check your credit history. Every consumer can order one credit report for free each year. It is a good idea to do this before you apply for a mortgage to identify any errors or problems. Go to AnnualCreditReport.com to order a free report now. Not sure how to decipher the report? See errors on the report? Ask your Realtor® or lender for help. The sooner you do this, the sooner you can resolve any discrepancies that could prevent you from getting a mortgage.
- Gather your documents. When you apply for a home loan, the lender or broker will require a lot of documents including two forms of government identification, two years of tax returns, two years of income statements, and proof of assets. You may need to provide additional documentation such as bank statements.
- Get pre-approval. When you get pre-approved for a mortgage, the lender or broker will determine whether or not you qualify for a home loan and, if so, how much home you can afford. The pre-approval process does not guarantee you’ll get a loan, but it is a good step in that direction.
For additional information or questions about securing a mortgage, check with your Realtor® or a reputable lender.