Most people who are in the market for a new car would never dream of going to only one dealership, yet those same people often neglect to shop around to find the home loan that works best for them. If you are in the market for a new home loan, try the following tips to get the best deal possible.
Decide What “Best Mortgage” Means to You
Certainly, you want to find the best mortgage rates, but don’t forget to consider other mortgage terms as well. Would you prefer a fixed-rate or an adjustable-rate? A 15-year term or a 30-year term? A small or a larger down payment? Think about all of your options and decide what makes the most sense for you before going loan shopping.
Get Your Credit Score Up
You’ll get the best mortgage terms if your credit score is 700 or above. If it falls below 700, you may not be eligible for the most favorable terms or the exact loan that you want. You can improve your credit score by challenging incorrect information on your credit reports, paying off excess debt to improve your debt-to-income-ratio, making any remaining loan payments on time, and not taking out any new lines of credit in the days before you complete a home loan application.
Contact Several Different Lenders and Brokers
A lender is an entity that loans you money directly, like a bank. A broker is an entity that provides your information to several lenders and fields mortgage offers. It’s a good idea to check with several lenders and brokers to get an idea of the types of loans and mortgage rates available to you.
Use a Mortgage Calculator to Compare Offers
Many online sites offer free calculators to help you figure out what your monthly payments will be under certain terms. Once you have contacted a few lenders and/or brokers, enter the figures into an online calculator to see how the different offers compare.
Negotiate for More Favorable Mortgage Terms
Don’t be shy about negotiating with lenders. For instance, if you would rather work with Bank A, but your best offer comes from Bank B, don’t hesitate to contact the loan officer at Bank A and give him or her a chance to match Bank B’s terms. You’ll find lenders especially willing to negotiate for your business if your credit is good.
Shopping for the best terms on a new home loan can be a little intimidating. Decide what terms make the most sense on your budget, compare offers, and negotiate with lenders to get the best deals.