Not All Mortgages are Created Equal
If you're shopping for a home mortgage, you want to make sure that you are getting the best rate. Your home may be the most expensive item that you ever buy, and you want to make sure that you pay the best price on it. Follow these tips to ensure that you get the best mortgage rate.
Check Different Lenders
When people shop for a new car, or a cruise, or even a new shirt, they don't always stop at the first store and buy whatever is for sale. Smart shoppers will look in the newspaper for different prices, check the internet, and call around for the best deal. In order to get the best mortgage rate, you will also need to shop around. Get mortgage quotes from more than one lender to find the best rate available to you.
Check Your Credit Report
Whether you have bad, good, or outstanding credit will make a huge difference in your mortgage rate. There are three bureaus that keep track of your credit: Experian, Equifax, and TransUnion. You will need to make sure that all three reports are correct. Unfortunately, errors can creep into your credit report, potentially turning a good credit report into a sub-par report. You can check your credit report for free annually at Annual Credit Report.com. Check to make sure that there are no errors. If you find mistakes, you can send a letter to the Credit Reporting Agencies to have them fix any mistakes. You can find a sample dispute letter on the Federal Trade Commission's web site. Be sure to send your dispute letter Certified, with a Return Receipt Requested.
If you have any delinquent payments on your credit report, you may wish to pay off these amounts before you apply for your home loan. Oustanding medical bills, forgotten credit cards, and unpaid utility payments can all ding your credit and make it difficult to get the best mortgage rate possible. Take care of any potential problems as soon as possible in order to raise your credit score. Resolve to pay off all your bills on time from now on, as late payments will lower your credit score and raise your interest rate.
Watch Those Credit Cards
Your credit score will be hurt if you are maxed out on all your credit cards. Pay down your credit card debt as much as possible in order to raise your credit score. The more available credit you are using, the worse it will look to your lenders. Aim for using less than half of your available credit. Some credit card companies have been cutting credit card limits; if this has happened to you, then you will have to pay off more in order to free up half of your credit limit. While you are paying down your credit cards, make sure that you don't apply for any new loans or credit cards. Inquiries to your credit card will also lower your credit score, which will make it harder to get the best mortgage rate available.
