Whether it’s your first time applying for a mortgage loan or your 5th, it is imperative that you take into consideration the five most important application factors. Here’s a close look at these factors and why they matter so much.
Go with a reputable lender
It’s very likely that purchasing a home will be the largest purchase you ever make. It’s because of this that you need to secure your mortgage loan through a reputable lender. If you haven’t heard of a lender before and they have no reviews with the Better Business Bureau, this is a sure sign to steer clear.
Fixed Rate vs. Variable Rate
There are many options to consider when you are looking into getting a mortgage loan. There are fixed-rate mortgages and variable-rate mortgages, but there are also those that are fixed for a specified period of time and then become variable rate. On top of this, any of these loans can have terms that range up to 30 years.
Before you decide on one, you will need to consider your long-term plans. Are you buying a starter home that you will only live in for 5 to 7 years? Is this the home where you plan to raise your family for the next 20+ years, or are you an empty nester and plan to down-size and retire in this home?
All of these positions may have a bearing on the type and term of a mortgage loan that will help you meet your goals.
You have to ask about fees
Watch out for hidden fees. A reputable lender will tell you about these fees from the beginning, but it never hurts to ask for a list of all fees that have to be paid in order for the mortgage to be approved. This way you can make sure that you and the lender are absolutely on the same page.
You need to file taxes
In order to qualify for a mortgage loan, you will need to provide proof of income, meaning you’ll also need to file taxes. Lenders usually stay clear of borrowers who deal only with cash because the funds cannot be verified.
Stay away from interest-only loans
Interest-only loans can seem quite advantageous, but in all actuality they don’t allow you to build up any ownership in your home, so you never really gain anything.
Stick with an offer
There’s absolutely nothing wrong with shopping around for the best mortgage rate; however, once you are given a reasonable offer, it’s usually best to stop shopping around. In fact, shopping around for too long may result in having your credit report dinged for checks and your score may decrease.