Buying a home can be a stressful time full of tough decisions and harsh realities. Many people don’t take proper steps before beginning the mortgage application process. This can result in higher rates, more fees, and can overshadow an otherwise exciting step in a family’s life. Taking a few small steps now to plan for a mortgage later could save you thousands of dollars over the life span of a mortgage. There’s no simple way to guarantee the perfect mortgage rate on the perfect house, but there are a few ways you can plan for success:
- Monitor and improve your credit score – Many people have spent their lives studying how to improve credit scores. Entire books have been written on how to improve your credit and ensure your reports are accurate. Do some research on how to obtain your reports, monitor your credit scores, and ensure that your credit score accurately represents your hard work.
A few points to keep in mind:
- Spend within your means. Avoid maxing out credit cards.
- Stay up to date on your bills. Avoid collection accounts and late payments.
- Avoid unnecessary hard inquiries on your credit.
- Don’t close and open new credit unnecessarily. Build a lengthy credit history.
- Obtain your reports and consider challenging items you believe may be inaccurate.
- Buy a house you can afford – the quickest way to get a mortgage interest rate you can’t afford is to buy a home you can’t afford. If all the mortgage rates available to you seem to be too high, you may be in a price range that is too high for your income. With high interest rates come monthly payments that may keep you from other wants or needs. When your home payment is cutting into your grocery bill, it’s likely too high. Take a step back, and think more carefully.
- Shop around – Mortgage companies want your business and will be competitive with their offers. If a mortgage rate seems too high, voice your opinion. Consider other companies. Don’t settle with a mortgage rate you can’t afford simply because you want a certain house. Look around and use the many companies around you to your advantage.
When it comes to buying a house and starting a mortgage, be patient and reasonable. You’ll likely be paying your mortgage for decades to come, so do your best to make sure it’s one you can afford and works with your lifestyle.