A mortgage is a loan secured by individuals for the purchase of real estate. It can also be used by real property owners to raise funds for other purposes using their properties as collaterals. Mortgage loans can be obtained from financial institutions such as banks, thrift institutions and credit union. The borrower reclaims the property used as collateral after repaying the loan and the interest. However, the mortgage lender forecloses or takes possession of the property if the borrower fails to pay off the loan. It is important to shop for mortgage to obtain deals with low rates. Thus, the following tips will help an individual in getting best mortgage loan deals.
Shop for Loans
The first step in getting low rate mortgage loans is to contact different lenders and obtain their rates and terms. A mortgage broker can help the borrower to contact several lenders but it is left for the borrower to get the best deal. Having access to different lenders will enable the borrower to choose from a wide range of loan products.
Compare Interest Rates and Costs
Get information from different lenders about the loan amount, loan term and interest rate. Information about the points to be paid to the broker, the fees and the down payment required by the lender is also important. Broker fees, underwriting fees and closing costs are fees involved in obtaining a home loan. Compare the information obtained from several lenders before negotiating with any lender.
Upgrade Your Credit Score
Your credit score can determine the type of loan and interest rate that would be made available to you. The higher the credit score, the lower the interest rate. Conversely, a lower credit score will attract a higher interest rate above the loan. Thus, it is important to enhance your credit score to get a better deal.
20% of the price of a home is usually required by some mortgage lenders as down payment but some lenders can offer loans at less than 20% down payment. However, a borrower is required to procure Private Mortgage Insurance if there is no down payment or if it is less than 20%. The insurance protects the lender if the borrower fails to refund the loan. To get the best deal, a borrower should endeavor to pay more up front so that the monthly mortgage payments will be lower.
Negotiate for the best mortgage deal with the lender of your choice after comparing the rates and costs of the home loan. Request for a lower rate, fewer points or even a reduction of the fees charged by the lender. After a satisfactory negotiation, the borrower obtains a written lock-in which states the agreed loan rate, the points to be paid and the period the lock-in will last from the lender.
Our in-house lender Maurice Can help you with the mortgage questions