Every borrower is different. That means that some mortgages may be ill-suited or simply not even qualifiable for some applicants while perfect for others. That makes finding the right mortgage confusing for many potential borrowers. Here is what you need to know.
Lenders Hate Risk
First and foremost, lenders hate risk. That means the better your financial situation is and the better your credit score is, the better the mortgage and terms you will be approved for.
Not to say that you can’t get a good mortgage if you have had a few financial bumps in the past but the lowest rates and best terms for mortgage products are for those borrowers who have nice big down payments, exceptional credit scores and nice stable incomes. Banks will be clamoring for these borrowers’ business because, simply, there is less risk in lending them money.
If You Don’t Fit That Profile
Most borrowers don’t fit that profile. And that is when it becomes more important to have options. Going from one institution to the next is not a good use of your time and energy. Having the expertise of a licensed mortgage broker can help you understand your options and what will fit with your financial challenges.
Do Some Financial Housekeeping
It’s always helpful to have as good a financial profile as possible when it comes time to go mortgage shopping. No matter the mortgage, you will have to fulfill certain requirements to get approved. These will be income, down payment, the value of the collateral and your credit score.
- Getting your credit score cleaned up is one of the most important things you can do as a potential borrower. The higher your credit score, the more advantageous your position and the better the rate and terms of the mortgage you can qualify for.
- Reduce your debt to income ratio by paying off credit cards and recurring loans. It’s important to avoid taking on more debt before applying for a mortgage. This is not the time to be making large purchases or changing jobs. A lender will want to see conservative spending habits and stable income and job continuity.
- Get preapproved. Before house hunting, it’s important to understand how much money you will be able to borrow. This is when having a preapproval is important. Having a preapproval letter with you when shopping will also give you an advantage when it comes to negotiating a sale. It tells the seller that you are a viable buyer and that you can afford the house you are looking at.
Consult with a Mortgage Broker
Take the time to speak with a mortgage broker. A mortgage broker will look at your entire financial picture and suggest options for the right mortgage fit. Whether that is a conventional mortgage or a government-backed loan such as FHA or VA, a mortgage broker can act as an advisor and steer you in the right direction.
If you are looking for professional mortgage advice, call the licensed California mortgage brokers at Granite West Funding. We would be glad to discuss your mortgage needs and help direct you to the right mortgage product that would fit them. Call us today at (559) 540-2275 to speak to one of our mortgage experts.