With interest rates hovering around their thirty year lows, a multitude of flexible and low cost loan programs are available as well as a wide variety of assistance programs that can help virtually anybody experience the joy of homeownership. In short, the economic environment simply couldn't be better to buy your first home.
However, if you have always been a renter than you probably aren't as well informed of the intimate processes of obtaining a home mortgage, as you'd like to be. To guide you through this exciting but often confusing time, this report details six tips that will help make your Delaware Home purchase a much smoother experience, save you money and eliminate your anxieties.
1) Get Pre-qualified Before Starting Your Search
Before you begin your home search, before you make one single decision regarding a home purchase, get pre-qualified by a mortgage professional. Pre-qualification is free and will give you a definite advantage in the buying process.
During the evaluation stage, it will clarify your financial situation, indicating how much home you can afford. This may influence your decision for location, narrowing your search. You'll also know exactly how much home you can afford, further clarifying your search.
Pre-qualification will also give you a step up on your competition. Homebuyers that are pre-qualified have increased leverage with Realtors and sellers over buyers who are not. Essentially a pre-qualified buyer becomes a "cash" buyer.
2) Shop Around For A Mortgage Professional
Like most industries, the quality of mortgage professionals can and does vary significantly. With the advancements in lending practices, consolidation between companies and aggressive start-ups there is significant awareness of the value of your business. So don't immediately settle on the first lender you talk to. Shop your mortgage around to at least two lenders until you find one that you completely and unconditionally trust.
While rates are certainly one of the most significant factors in choosing a lender, compare closing costs, are the "points" involved or not (which is the percentage of the mortgage that the originator takes as commission) and how long is your pre-qualification good for. Traditionally, to get a prime rate you had to pay "points" at the closing, but this isn't true anymore. Also, the pre-qualification should be good for at least three months and up to six months. In the past, some lenders only approved you for one month.
3) Don't Become Fixated On The Interest Rate Alone!
Be careful! The lowest interest rate does not always translate to the best deal. Look at the loan programs that are being offered, not just the rate. There are several factors that have to be taken into account when evaluating programs – the loan type (fixed or adjustable), the loan term (15 year or 30 year), the rate and the down payment requirement.