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Finding the Best Interest Rate on a Mortgage

Mortgage brokers and other real estate experts can often help homebuyers find the best interest rate on a mortgage that fits their needs. That doesn’t mean borrowers shouldn’t shop around be well informed before talking to an expert.
Here are a few things consumers can do to get the best interest rate on a mortgage:

Fixed vs. adjustable
Fixed- and adjustable-rate mortgages are the two most common forms of mortgages. A fixed rate is set for the life of a loan, usually 30 years, and the mortgage payment is the same every month.

An adjustable-rate mortgage, or ARM, has an interest rate that changes after a certain number of years. It can remain at one rate for a year, then can change based on an interest rate index chosen by your bank. An ARM can also be steady for five to 10 years, and then adjust annually.
ARMs usually have lower interest rates than fixed mortgages, and can help people afford homes if they only plan to live in them for a few years.

Pay points
Paying what’s called a “point” through an upfront fee can lower the interest rate on a home loan. One point equals 1 percent of the total mortgage amount, and lowers the interest rate by a fixed amount, usually 0.125 percent.

If you plan on staying in a home for a long time, paying points can save you money. You just need to do the math and determine how many months or years in savings it will take you to recoup the amount you paid in points.

Qualify for loan programs
Some loan programs have lower interest rates for eligible borrowers. These include VA loans for military veterans, FHA loans approved by the federal government, USDA loans and other government programs for first-time homebuyers.
If the interest rates aren’t as low as you’re hoping for, these programs can still offer savings with low down payment requirements, protections if you fall behind on a mortgage, and allow low credit scores to qualify.

Improve your credit
Having a high credit score is one of the best things you can do to qualify for a better interest rate.
In the months before applying for a home loan, pay your bills on time and pay your credit card balances in full. Also check your credit report for errors and dispute them.

Interested in more real estate tips? Contact me today!

A Step-by-step Guide to Preparing Your Finances for the Mortgage Pre-approval Process

MortgageeBeing pre-approved for a mortgage isn’t just a way to get a step ahead, in many cases it’s a necessity to buying a home. Sellers don’t want to go through the negotiation process of selling their home only to have the buyer drop out when they can’t get approval for the mortgage they were relying on.

The Difference Between Pre-Qualification And Pre-Approval

Pre-qualification is a faster process than pre-approval and is usually a best estimate based on how the borrower answers certain questions about their financial history and status.

Pre-approval is way more valuable to a borrower than pre-qualification because it is a commitment from a lender for a decided amount after they have completed an in-depth verification process based on the submitted documentation.

Preparing For The Pre-Approval Process

The majority of lenders will require the same documentation in order to pre-approve anybody for a mortgage, but there is more information they will need in certain cases.

Anybody applying for a pre-approval will need to ready at least two years’ worth of financial information, including W-2s, Form 1099s and federal tax returns as well as current banking and financial records.

Here is where the pre-approval process gets more in-depth, not only will the lender need to see how much money the applicant has in their bank, but they will need proof as to where the money came from. The lender will need to know the difference between income, gifts or investment withdrawals to help them make their decision.

Having this information ready in advance will speed up the process significantly.

Prepare Proof Of Assets And Allow A Credit Check

Applicants will be required to prove ownership of all assets and will need a letter to prove that any cash gifts given to them to assist with the payment are not loans that need to be paid back. This is important information that will help a lender make a decision, so having the letter ready will save a lot of time.

The lender will also need to check the applicant’s credit to compare it to the applicant’s income. Many people refuse the credit check because they are afraid it will impact their credit score, but the impact is very low and the lender needs this information. It is also a good way to learn about any errors in the credit report early, before they can pose a problem down the line.

We work with lenders who know the process inside and out and can determine, within, 24 hours, your qualification status for a loan.  At Catskill Country Real Estate, we suggest you get prequalified first, and then begin the loan approval process thereafter.  You, the buyer, will have a head start on others and be able to make the deal while another buyer is still “thinking” about getting a loan.