Are You Ready For a Mortgage? Top 7 Ways To Find Out.
08/06/2010 A mortgage isn't something you jump into without a thought. If you want to do it right and take advantage of the best mortgage rates available today, you need to prepare yourself. How do you know if you're ready? Check out the following seven steps.
Get a job. Hopefully you have one already, but if you don't, you're not ready for a mortgage. Lenders want to see a solid, consistent employment history. At least two years of continuous employment is usually necessary to earn you the best mortgage rate. Don't quit your job. Don't switch jobs, if you can help it. Maintain stable employment.
Pay your dues. Make sure you pay your bills regularly, on time. You can't afford any late payments if you're preparing for a mortgage. Late payments will destroy your credit score, and a damaged credit score won't get you good rates. Make sure you pay your bills properly.
Don't mess up your credit report. It's definitely crucial to pay your bills on time, but you can also damage your credit report simply by opening a new store account or taking on an additional credit card, even if you don't spend any money or make any payments. The same is true of closing current accounts. If your total amount of available credit increases or decreases, lenders may see this as a sign of financial volatility. This is not good. You want to paint a picture of perfect financial stability.
Educate yourself. Learn everything you can about mortgages and the mortgage industry. There are numerous options available, including FHA home loans and VA home loans and no two loan options are alike. Educate yourself. Learn the terminologies. Learn how to talk intelligently with lenders. This will help you enormously when it comes time to select and negotiate a deal.
Know your needs. Before you even think about taking out a mortgage, decide what you need. What's the largest payment you can afford each month? What's the smallest payment that would work in your timeframe? Do you plan to move again in five years? Identify your own needs. No one is going to do this part for you.
Compare lenders. Never take out a mortgage with a lender, no matter how perfect the deal sounds, until you've compared your options. Meet with several local lenders who aren't affiliated with one another and find out what they can offer. A mortgage is a long term commitment, and you want to be able to trust your lender. This is likely the most important step in the process. Compare everything--rates, points, insurance requirements, closing costs, and so on.
Ask questions. Ask questions. Then ask more questions. Sometimes, if you don't ask, you'll never know. Your lender wants to work with you, but in order for him or her to serve you best, you've got to ask questions when you're unsure about something. Talk. Converse. Make your needs known.
If you can do all these things, you're ready to take out a mortgage.
