Mortgages are a fundamental element to the process of homeownership, and because of this my biggest recommendation is meeting with your mortgage specialist or finding a recommended mortgage professional. With that being said, there are a couple of general tips that I recommend to anyone curious about the important elements of mortgages in the realm of real estate!:
Get Pre-Approved, Not Just Pre-Qualified
PRE-APPROVAL VS PRE-QUALIFICATION. Pre-approval is stronger, shows sellers you’re serious and helps define your true budget before you fall in love with a home.
Shop Around for Rates
Compare at least three lenders as rates and fees can vary widely, and options could include online lenders, credit unions, traditional banks, and more.
Know the Big Three: Credit, Debt, and Downpayment
Credit score: higher scores = better rates. Debt-to-Income Ratio: Ideally under 43%. Downpayment: 20% isn’t required! Many loan options and property transactions can offer as low as 3-5%.
Understand Your Loan Options
Whether you choose a conventional, fixed-rate, variable-rate, or another option, understanding your options can help equip you to make the best decision.
Don’t Make Big Financial Changes Mid-Process
Avoid opening new credit cards, financing a car, or changing jobs, as these can delay or derail your mortgage approval.
Budget Beyond the Mortgage
Plan for property taxes, insurance, HOA fees, maintenance, or any other unique charges that may apply to your property.
Lock Your Rate
Rates can change daily. If you like what you see, ask your lender to lock it in during underwriting.
Ask About Closing Costs
Expect 2-5% of the purchase price, however some costs can be negotiated or rolled into the loan (ask about credits or seller concessions).
Keep Documents Handy
Lenders will want pay stubs, tax returns, bank statements, ID, and more, so having these things ready can speed up the process.
Use a Local Lender if Possible
Local lenders can often move faster, communicate better, and understand regional requirements or programs.
The mortgage space can be a place filled with stress or uncertainty, but it doesn’t have to be! By finding a mortgage specialist and staying in touch with them, you can save yourself the unwarranted difficulties and ultimately make your real estate journey that much smoother.
