There are many lenders and mortgage brokers who are genuine and honest about their profession, but unfortunately we do not have any way of knowing this unless we become educated about the mortgage process. When you are shopping for mortgage quotes and lenders, follow these important tips.
Although it is not final, ask the lender to give you a quick quote. This is helpful for you to make an estimation of your monthly payment. While doing the estimation you need to consider the length of time you plan to own the house, the specific type of mortgage you want, the amount of down payment you are ready to make, your debt-to-income ration, sources of income and your repayment ability. After this you can talk seriously with the lender and ask for a final quote.
It is a common knowledge that mortgage rates do not remain fixed but fluctuates on a daily basis. Hence, it is important to do all of your research within two or three days before applying. Also, when you get a suitable mortgage rate, make sure to lock it in for 30 days. In this way, if the rates rise within those 30 days, your rate will stay the same.
The hallmark of a good lender is to give you a good faith estimate after receiving your application. This is required by law and is to be done within three days of submitting the application. This document will detail all of the fees associated with the application, which should not vary during the mortgage process.
After undertaking all these steps, you can not still blame the lenders if they hesitate to give you a mortgage that you prefer. It is so because all mortgage applications are assessed on your ability and willingness to repay, and the type of collateral. Your ability and willingness to pay is assessed by the income available less existing credit commitments and by a credit check reviewing past credit history and credit score. The collateral is assessed as the value of the property less the amount of the mortgage required. If you are found wanting in any of these factors, then naturally the terms and conditions offered to you will be stricter and not to your liking.
The greater the value of your collateral in relation to the amount your want, the more likely you will get a cost effective loan. A large amount of equity could also result in a lower rate of interest being payable. Currently, there are a handful of lenders who will lend up to 90% of the value of a property, but only the best applicants are accepted. A 15% deposit will be required if you want some benefit, with a 25% deposit being required to qualify for the best rates available.
While assessing your ability to repay, lenders will also look at not only the level of income, but the likelihood that it will continue into the future. Therefore, an applicant who has had a stable employment history will be more attractive than one who has switched jobs frequently, or has recently taken up their position. The frequency with which an applicant has changed address in the past will also be taken into account. If you are able to convince your lenders by fulfilling the above criteria, you can confidently look forward to get the most favored treatment from any mortgage lender, any where.
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