8 Things to Consider When Getting a Mortgage for Your New Home

Buying a home can be a fun and exciting experience, but finding the right home is only one step in the process. It’s a big financial commitment that involves a lot of paperwork, which is why finding a home loan can be just as important. If you’re not prepared or aren’t organized, you could deal with some frustrating delays. Proper preparation and understanding of how to get a mortgage before you start the process will make sure the process goes more smoothly.

Here are some things you should consider while you’re looking for a mortgage on your new home.

#1: Start Saving for a Down Payment

Depending on the lender and the type of loan you choose, your required down payment can be 3-20% of the home’s purchase price. Having a monthly budget will help you set aside enough money for your down payment. Once you have determined what your budget will support, think about automatically depositing the money from your paycheck or bank account to a savings account because it will be easier and more convenient to put money away every month. If you’re not able to come up with a large down payment, you should look into getting an FHA loan (which helps homebuyers who can only make a small down payment).

#2: Check Your Credit Report

Having a strong credit profile will put you in a better position to get the best deal on a home loan, so it’s a good idea to get a copy of your credit report before you start the process. You’ll be able to see what your credit profile looks like to a potential lender, so you can take steps to improve certain factors or correct any inaccuracies. You can get one free copy of your credit report every year from each of the three major credit reporting agencies by going to www.annualcreditreport.com.

#3: Organize Your Financial Documents

When you apply for a mortgage, you’ll need to give the lender a number of financial documents because it will make the loan application process go more smoothly. You should at least be prepared to give them your last two pay stubs, your most recent W-2, your tax returns from the last two years, as well as any current bank and brokerage statements.

#4: Use a Mortgage Calculator

Mortgage calculators are great tools that can help you understand how much you can afford. They’re easy to use, and they can show you how much your monthly mortgage payment would be under different home prices. They will even allow you to work through different down payment and interest rate scenarios.

#5: Learn How to Compare Offers

Not all mortgages are created equal. Even if loans have the same interest rate, there may be differences in the points and fees that can make one offer more expensive than another. You need to understand all of the things that go into determining the price of a mortgage, because it will allow you to compare different offers. You also want to understand the different parts of mortgage pricing.

#6: Start Tracking Interest Rates

This will be one of the biggest factors in determining the cost of your mortgage. They change almost every day, and it can be helpful to know which direction they’re going.

#7: Get Pre-Qualified

Many real estate agents want you to get pre-qualified for a loan before they will even work with you. It’s a simple process that usually requires some financial information. This will include your income, any amount of savings and investments you have, as well as a credit check. Once you have been pre-qualified, you’ll have a better idea of how much you can borrow and what types of homes you can afford.

#8: Understand the Different Loan Options

Your parents might have had a 30-year fixed-rate loan, while your best friend might have had an adjustable-rate loan. But it doesn’t mean that either loan is right for you. Some people like the predictability of a fixed-rate loan, while others prefer to have a smaller upfront payment that can come with an adjustable-rate loan. Every home buyer has their own unique financial situation, and you need to understand which type of loan will work best for your specific needs.

If you’re looking for one of the best custom home builders in Corpus Christi to help you design your new custom home, be sure to get in touch with Devonshire Custom Homes.