How to Shop for A Mortgage
Looking for the best mortgage deal can be a daunting task, but it's essential if you want to save money in the long run. By securing a lower interest rate, you'll be able to reduce your overall mortgage payments. Here's how you can shop around for the best mortgage deal in four straightforward steps.
1. Get Your Finances in Order
To be prepared, you've got to know what lenders are looking for. Lenders will primarily focus on these 4 factors:
A strong credit score.
A low debt-to-income ratio to show that you don't spend most of your income on debt payments.
A steady job.
Funds available for a down payment. This downpayment can range from 3% on up, with the best rates available at 20% or higher.
2. Estimate What You Can Afford
It’s important to understand both the purchase price you qualify for and what a comfortable monthly payment will be. You’ll want to keep payments under 1/3rd of your take-home pay so you may want to aim for a purchase price in your home search that is below what you are approved for.
3. Shop Around
Once you have a budget in mind, it's time to reach out to different lenders. Don't worry, you don't have to do it alone. You can work with any lender you like, but I can also recommend some great lender partners who've been amazing for my clients. By shopping a few options around the same time period, you'll avoid negatively impacting your credit score with multiple pulls and be able to compare rates more accurately.
4. Compare Offers
Once you have a few offers in hand, take the time to compare them. Don't exclusively focus on the interest rate, though, you’ll also want to consider the closing costs and mortgage points. By comparing all three factors, you'll be able to make the best decision for your financial future.
Whether you're a first-time homebuyer or a seasoned refinancer, mortgage shopping can be a straightforward process. Reach out if you would like vetted refferals and follow these steps to increase your chances of finding the best mortgage deal for you.