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Mortgage checklist: How to get the best loans

Before buying anything, check on your financesfirst. Whether it’s a new pair of shoes you’re eyeing or a piece of real estate, this advice should matter a lot. This is especially true with major financial investments like buying a home.

One of the most common financing sources for this is through a mortgage, especially for those targeting median-priced homes. Affluent buyers may be more inclined to make a cash purchase, but they should keep in mind that are certain benefits to using mortgage loans, as well.

If you are planning on buying your next home with a mortgage, whether through conventional means or through a jumbo loan, getting the best loan ratesshould be your top priority. Before shopping around for homes for sale in Bridgeport, Washington, try these helpful tips to get the best mortgage deal possible:

Keep your credit score up

In most cases, a high credit score is equivalent to lower mortgage interest rates.Lenders will use your credit score to measure your risk of defaulting on the loan. A credit score of 670 to 739 is considered good while credit scores of 740 and above are exceptional.

To improve your credit score, keep your debt-to-income ratio at a manageable rate. Pay off most or all of your debts and do not apply for any credit cards or loans before applying for a mortgage. Check your credit reports and see if there are any errors. If there are, have them corrected immediately.

Pay a sizable downpayment

Paying a sizable down payment means needing a smaller mortgage. This will save you a lot of money in the long runwith the lower interest rates to pay. With a significant down payment, lenders will also perceive you as a minimal credit risk.

A down payment of 20% to 25% is considered ideal and exempts you from the mortgage insurance requirement. Lenders will also typically offer the lowest interest rates and fees to those who provide a down payment of 40% or more.

Keep ample cash in reserve

Cash reserves are funds that are set aside for emergency situations. Examples of these include your savings or checking account, certificates of deposit, and/or money market funds. The more you have in your cash reserves, the less risk you pose to the mortgage lender.

Ideally, your cash reserves should cover at least two months of house payments, as well as money to pay for the interest rates, taxes, and insurance. For larger mortgages, a higher cash reserve may be required.

Consult with different mortgage lenders

Shopping around for mortgages will give you a better sense of what types of deals are out there and their associated fees. Once you know what to expect from the market, you can go to lenders and negotiateon the finer points of the loan.

Look at mortgage fees carefully

Always keep an eye out for any and all fees associated with the loan. Bring up redundant or unnecessary fees that you may find in your mortgage deal and ask if these can be removed. You should also watch out for extra fees such as arrangement fees, overpayment fees, and even early payment fees. Make sure you understand what those said fees are for.

Explore your real estate options today in the Lake Chelan area with Coldwell Banker Lake Chelan Properties. Call us today at 509.682.7777. You can also send us an email at info@cbchelan.com.