5 Ways To Land The Best Mortgage

MADISON, Wis. - Nov. 22, 2013 - PRLog -- RIS Media, Today's eNews, by Kathleen Lynn, October 12, 2013
After riding a swift updraft earlier this year, mortgage rates have steadied. But there's a good chance they'll resume their upward path. That's one of a number of things borrowers need to know now to get the best loan.

1. Do your homework
a. Check your credit report with the three credit reporting agencies. You can do it for free at AnnualCreditReport.com. If there are any errors, correct them. Then do what you can to improve your credit rating by paying down your debt.
b. Avoid borrowing to buy a car or other big-ticket item in the months before you apply for a mortgage—and, for that matter, up to the date you finally close on your new home.
c. Then shop around among several lenders for the best rate.
2. Get preapproved
Even before you start looking for a house, you should get preapproved for a mortgage. This will make you a stronger buyer, because sellers will know you have the financing in place to move forward. In addition, getting preapproved for a mortgage amount sets boundaries around what you can afford. "Those boundaries dictate what your price range is," said Greg McBride, an analyst with Bankrate.com.
3. Choose between rates
The standard loan offers a fixed interest rate for 30 years. Adjustable-rate-mortgages (ARMs) offer a fixed rate for, typically, the first five or seven years; after that, the rates can rise every year. "Forget about adjustable rates altogether unless you have sufficient financial stability that you could absorb a higher monthly payment if your timetable doesn't pan out," McBride said.
4. Decide length of loan
A homeowner with a $300,000 mortgage will pay $1,520 a month on a 30-year, 4.5 percent mortgage. A 15-year mortgage, at 3.75 percent, would run $2,182 a month. But over the life of the loans, the 15-year borrower would pay $92,700 in interest, while the 30-year borrower would pay $247,220 in interest.
5. Lock in your rate
Once you have found a good rate, consider locking it in, which you can usually do for no cost, or for a fee that is refunded at closing. It's not worth betting that rates will fall before you close on the house. "Don't try to guess the way rates are moving," McBride agreed. "I'm not a fan of people rolling the dice for something as significant as what their mortgage payment is."

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