The following insights into the mortgage industry will help you secure the best deal possible on your loan
Home prices are still lower than during their peak in 2006 and mortgage rates are at an all-time low, making now the right time to buy a home. However, if you want to buy, chances are that you will have to get a mortgage. The following insights into the mortgage industry will help you secure the best deal possible on your loan.
The Best Time to Close is the End of the Month
You can close on your home whenever you like, but your prepaid interest fees will be higher if you close near the beginning of the month. Interest starts accumulating the day you close, and you must prepay the interest on the rest of the month in which you close the mortgage. This increases the up-front costs of owning a home. Avoid this by closing on the last day of the month so you do not have to prepay any interest.
Credit Score Requirements Vary
If your credit score [3] is less than 680, your odds of getting a mortgage are much lower. However, do not give up if you have less-than-ideal credit. Instead, try obtaining a Federal Housing Administration loan. Down payments are lower, the rates are competitive and you can get a mortgage with a credit score as low as 620.
There Are Always Closing Costs
Advertisements from mortgage lenders often proclaim “no closing costs.” This is like when landlords claim that utilities are “free.” They are not free, they are included in the rent, just like closing costs are often paid in higher interest rates.
The Market Is Not a Monolith
Many people will drive around looking for the best price on gas but won't shop for the best mortgage rates. Lenders are banking on this, but you should always research the best rates [4], credit report fees, closing costs, origination fees and title search fees before you buy a home.
Knowing some of these secrets can help you pay less at closing or over the life of the loan. Take your savings and add them to your retirement account, use them to fund improvements in your new home or apply them to debts to stay on a smart financial path.
What is the best advice you ever got when applying for a mortgage? Share your tips with our readers in the comments section below.