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Guide to Mortgages - 9 Steps to Finding The Best Mortgage for You

Aug 17, 2007
It is best if they are done sequentially because each one is interdependent of the next step in the process.

* 1. Step 1: Check your credit
When buying a home, one of the first things you should do is check your credit report and score. Your credit score is probably the most important piece of information a lender considers when deciding on your interest rate, so you want to be sure that everything on your credit report is correct. Mistakes can hurt your credit score, increasing your rate and monthly payment.

* 2. Step 2: How much can you afford?
Before you start looking for your new home, you need to know what your price range is. But how do you determine what you can afford?

* 3. Step 3: Finding the best mortgage
One of the most important steps in buying a home is determining what kind of mortgage is right for you. After all, a mortgage is a financial commitment that will last for many years. Make sure you select a mortgage that matches your risk tolerance and financial situation.

* 4. Step 4: Getting prequalified for a mortgage
It's a good idea to get prequalified for your mortgage before shopping for a home. Prequalification involves supplying a lender with basic information regarding your debt, income and assets. From this information, lenders can get an idea of the mortgage amount for which you qualify, and it can usually be done at no cost.

* 5. Step 5: Compare mortgage offers
When buying a home, you shop around for the house that best suits your wants and needs. But did you know that you should do the same for your mortgage?

* 6. Step 6: Getting preapproved by your lender
Now that you've chosen your lender, you'll want to get preapproved. Preapproval means that your lender has thoroughly checked your finances, including your income and debts, and has given you the thumbs up for a loan of a certain amount. There may be a time frame on your preapproval, so be sure you know how long it lasts.

* 7. Step 7: Lock in your interest rates and points
Since it's often weeks, and sometimes months, between getting prequalified and closing on your home, it's a good idea to lock in your interest rate and points.

* 8. Step 8: Closing
After locking in your rate and points, you're close to the finish line. The last step is closing, which will likely include writing a large check to your lender.

* 9. Step 9: Your mortgage check-up
Once you have bought your house and settled in, it is important give yourself a mortgage check-up every few years. Keeping your eye on interest rates can help save you money on your mortgage.
About the Author
Chris Navi - I want everyone to be well informed in regards to their mortgage, home buying and property buying situations. My website http://fundinglist.com/guide-to-mortgages/index.php will give you details on each of the steps mentioned in my article.
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