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Tips for the Best Mortgage

By: Serg Harros Knowledge is often defined as learning from ones mistakes. In the case of getting financing for a loan, you can use the following without having to make the mistakes yourself.

1. To minimize the stress of the real estate transaction, it is always best to get pre-approved for a loan. When you get pre-approved for a loan, the lender guarantees they will give you the pre-approved amount for a set number of days, often 30 to 60.

2. In the old days, it took weeks to get approved for a mortgage. Many lenders now use a software program to determine if they will give you a loan. If your credit is in good shape, it can take as little as three days for approval.

3. Adjustable rate mortgages fix their interest rates on various financial markets. Perhaps the most popular with lenders is the One Year Treasury Security Index. It is based on the weekly average of US Treasury security yields.

4. When evaluating your mortgage application, the lender will get a FICO score for you. This is a cumulative report drawn from three credit agencies. They are TransUnion, Experian and Equifax.

5. When you apply for a mortgage, the lender is going to ask you what reserves you have. Ideally, you should reserves equal to three months of your expenses.

6. One of the great fears of applying for a loan was the mood of the particular underwriter that reviewed your application. This is less of a problem now. Many lenders now use automated mortgage underwriting.

7. When you apply for a mortgage, your credit score is a key factor. A FICO score of 740 or above is considered great credit, 700 to 739 is good, 680 to 699 is okay and anything below is bad.

8. The tax code in the United States makes little sense, but it is helpful with refinancing. If you refinance your home, you do not have to pay any capital gains tax. This is true even if you refinance for more than the home is worth.

9. These days, most mortgages come with teaser rates. They are really low rates that run for the first couple years of the loan then go up to normal rates. Make sure you can afford the payments associated with the normal rates to avoid problems.

10. To get an accurate account of your closing costs, make sure to ask for a HUD-1 form. It has to set out all closing costs.

Home ownership is the cornerstone of our society. The government and lenders know this and are a pivotal part of financing such ownership. In short, you should be able to get a loan, so don’t worry too much.