Mortgage Tips for 2014
Filed under: Market Comentary
If you are in the market to become a homeowner, it is very important to make sure you are prepared to act quickly when you find that ‘perfect’ home. And, with mortgage rates still at attractive rates, it is even more vital to have all of your finances in order to give you the best opportunity to get that dream house.
A recent article by Polyana Da Costa of Bankrate. com had some great tips on how you can be ‘ready’ when you find that house you really want.
- Document Your Finances
Due to the new mortgage regulations that went into effect in January, lenders have to be extra careful when they are underwriting a home loan. These new rules make sure that you, the borrower, definitely have the ability to repay your loan. So, it is extremely important that you have all of your finances documented.
- Keep Excellent Records of Your Finances
Being organized with all of your finances is crucial. Make sure you have all of your bank statements, tax returns, W-2s, investment accounts, and any other possible assets you have as organized as possible. In addition, according to Da Costa, you should be ready to explain any ‘unusual deposits’ to your accounts. It is a good idea to document any deposit you have made that isn’t salary related.
- Lock In a Rate
Throughout 2014, mortgage rates are most likely going to continue to climb because the Federal Reserve is expected to reduce the pace of the economic stimulus program that has been keeping rates low. With this in mind, it is a good idea to lock in a rate immediately once you have found that home you want to purchase and know the expected closing date. However, it is always good practice to confer with your lender to make sure you make the proper “locking” decision.
- Know Your Credit Score
Due to the new mortgage regulations, it is becoming very difficult to get a mortgage without good credit. Once you are serious about applying to get a mortgage, you should monitor your credit history and credit score until your loan closes. Remember, a borrower with a credit score of 720 or higher will get the best mortgage rates. You can still definitely get a mortgage with a credit score of 680, but if you have a lower credit score, it will most likely mean higher rates and/or higher closing costs.
- Don’t Overspend
It is a good rule to follow to attempt to keep your monthly debt obligations, which include your mortgage and property taxes, below 43% of your income.
If you are considering purchasing a home, it is a great time to do so and I can definitely help you in the process so please give me a call and we can discuss all of your needs and concerns.
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