Today, getting a mortgage is as easy as filling out an application and waiting for approval. However, the financial industry has changed over the past few decades. Mortgage rates have dropped substantially and Banks are now offering lower-risk products that meet higher standards of underwriting. In other words, going to the bank to get a loan used to be like playing Russian Roulette — you just never knew when you’d get your hand cut off!Unfortunately, this gives those with bad credit or past mortgage delinquencies an edge over others. It can also make refinancing more difficult for people with less than perfect credit who want to save money.If you’re trying to get a mortgage but already feel like you’re in over your head, it might be worth looking into some of these tips from experts so you can get approved sooner rather than later:
Go to a Bank that’s Trusted
Trusted lenders make it easier for you to get approved for a loan. This could be because you’ve worked with them in the past, you know their representatives from a networking event, or you just trust them more. Whatever the case, going to a bank that’s trusted can help you get a loan that’s easier to qualify for, lower your interest rate, and get you approved faster. There are a few things to keep in mind when going to a trusted lender: Use a credit monitoring service. A good one will let you know if someone is reporting on your credit report. Be aware, though, that your credit score is going to change depending on a variety of factors, so it’s important not to put all your eggs in one basket. Shop around. Some banks may charge a higher interest rate than others just because they’re sitting on your credit file. Don’t be afraid to ask questions. It’s one thing to fill out an application and quite another to get a loan officer on the phone and ask questions about how a loan is structured, how much you can borrow, and even what your repayment plan is. This is your loan, not a loan to cronies.
Hire an Appraiser
Just as with any mortgage, you hire an appraiser to come to your home and estimate the value of your home. The appraiser uses a variety of tools to estimate your home’s value, including looking at recent sales of similar homes in your area and using computers to help them do their job. There are a couple of things to keep in mind when hiring an appraiser: Do your research. Once you hire an appraiser, you’ll want to make sure they’re a good fit for you and your home. Find out what kind of appraisal they’re Hire an appraiser who’s good at what they do. Make sure you understand what your appraisal costs will be. Some appraisers will charge you a fee when they do the appraisal, but most will estimate the price and let you pay once you sign a contract. Always make sure you understand how your appraisal will cost before hiring an appraiser.
Establish a good credit history
Once you’ve hired an appraiser and signed a contract, you need to make sure you establish a good credit history with them. To do this, you’ll need to start making regular payments. Ideally, you’ll be able to pay them off in full before the end of the term of the loan. Some people make the mistake of waiting until the end of the loan term to pay off the balance, but that can lead to higher interest rates and points on the credit score. Instead, pay your appraiser the agreed-upon amount no later than the end of the term of the loan.
Be Flexible With Your Payment Options
Once you have a good credit history and an accurate appraisal, it’s time to start shopping around for a loan. You can use all the tools you’ve got to shop around, like your credit score, lender information, and loan terms, but the most important thing is to be flexible. Make sure you can realistically pay off the loan and make regular payments. If you have a family emergency or an extracurricular project you have to take on, you may need to cut back on your payments. Make sure you have the ability to rearrange your schedule so you have time to pay your mortgage and other bills on a regular basis.
Ask for a Mortgage Refinance Loan
A mortgage refinance can give you a chance to get a better interest rate on your loan as well as lower your monthly payments. This can save you a small fortune over the term of your current loan and allow you to make a larger down payment. With a refinance, you can also shop around for different loan interest rates, different loan terms, and different financing options. By shopping around and using the refinance option, you can really get a feel for what’s out there and what your options are. The refinance option is usually only available to people who have bad credit or past mortgage delinquencies. Make sure you understand the requirements for refinance and make sure you can meet them before applying.
Get an Appraisal and Home Inspection
Once you’ve chosen a loan, it’s time to go to the garage and get your wheels inventoried. The appraiser uses a variety of tools to estimate your home’s value, including looking at recent sales of similar homes in your area and using computers to help them do their job. You’ll also want to bring your vehicle with you to the appraisal, so the appraiser can get a better idea of how much it’s worth. This is to make sure you get a fair appraisal and don’t settle for anything less than you deserve. You won’t be able to take the car to the appraisal either, so make sure you have it in good shape. Wash the car, clean the windows, and put on a clean set of tires. Put the engine in good working order, and make sure the brakes work as they should.
Other Ways to Diversification of Risk
Beyond using a refinance for your loan and getting an appraisal and a home inspection, another way to diversify your risk is to shop around for other types of financing. This could be a mortgage loan, a vehicle loan, or even a lease. It’s important not to put all your eggs in one basket, though. You can’t bank on a refinance or a lease paying off, especially if you have bad credit or past mortgage delinquencies. Make sure you have a diversified portfolio of financing options to reduce your risk.
Getting a mortgage can be a really advantageous thing to do. However, it’s important to diversify your risk so you don’t get too overwhelmed by one loan and can still come out with a profit. In other words, don’t put all your eggs in one basket.