Category: Mortgages

Top Tips for getting a Mortgage in 2017

If you want to get the best possible mortgage in 2017, there are going to be some key things to remember. The more time you take to get this information, the better your loan is likely to be. One of the worst mistakes that you can make is rushing into this type of loan, because you will almost certainly regret it.

You can make a small down payment or none at all

It’s important to keep in mind that you don’t have to put a ton of money down to get a mortgage. You will certainly be able to put down only a little bit or even nothing at all, if you qualify for such an option that is. Not everyone will be able to not put down anything for their loan, but you might be able to depending on what your credit is like. Federal Housing Administration-insured mortgages allow down payment as small as 3.5%. There are also some lenders who will accept as little as 3% of the total mortgage down.

Get a Loan with the FHA if you have bad credit

While some people might tell you that bad credit means you won’t be able to get the home loan you are after, that’s not necessarily true. The FHA or Federal Housing Administration could help you to get a mortgage despite your low credit score. The average credit score for an FHA homebuyer was about 686 in 2016.

You will need a credit score of 580 or higher to get an FHA-insured mortgage with a down payment as low as 3.5 percent, so keep that in mind. If you have a particularly low credit score and you’ve been turned down by other lenders, the FHA could be of great help.

Keep some savings in Reserve

It is highly recommended that you keep some savings in reserve, because you don’t want to deplete your entire savings account. Mortgage lenders look for applicants with cash reserves, so you will need to keep this in mind when applying. It’s always a good idea to have at least a little bit set aside just in case.

Your lender will ultimately calculate the minimum reserves you will need to qualify for a mortgage. There is a distinct possibility that the reserve requirements will require you to unexpectedly make a down payment of less than 20 percent, which in turn will force you to get mortgage insurance. Lenders always prefer that applicants have an emergency fund.

Refinance into a 15-year loan

There are a number of reasons to consider refinancing into a 15-year mortgage, including the fact that doing so will ultimately save you quite a bit of money. These mortgages tend to have lower interest rates than 30-year loans, and you will pay interest over a shorter period of time. The monthly payments on a new 15-year mortgage are typically higher than a longer one, but the interest paid over the life of the loan is far less.

Only borrow what you can afford to pack back

Make sure that you only borrow what you can afford to pay back, because otherwise you are just inviting a whole world of trouble. A lot of people make the mistake of borrowing more than they can really afford, and as a result they end up with a massive amount of debt. Take the time to go over your monthly budget as of right now to see if you can afford to make the necessary payments on time. If you determine that you cannot afford it, do not take out the loan.

Ask about a no-closing-cost Mortgage

A standard mortgage has thousands of dollars in mortgage fees and other closing costs. If you are able to pay these fees out-of-pocket, you will probably get the best possible interest rate that you qualify for. You might want to think about accepting a higher interest rate in exchange for allowing the lender to pay some or all of the closing costs though. Keep in mind that these fees can be quite substantial, so it is definitely something to at least think about.

Get a Zero-Down VA Loan

If you are a veteran, you might want to look into getting a Veterans Affairs-guaranteed mortgage. This mortgage will require you to put absolutely nothing down on the loan, which is a great benefit in and of itself. About 1/8 of all mortgages in 2016 were guaranteed by the VA, according to the Mortgage Bankers Association. This type of loan might just be able to get you the house you want without requiring you to put anything down initially. Lots of veterans get these loans each year, and it is certainly an option that you should at least consider before deciding what to do.