- August 9, 2017
- Posted by: steve
- Category: mortgage rates
Thinking about buying a home in Florida? Here’s the best way you can snag a great mortgage rate on a home.
When someone is in the market to buy a home in Florida, there is a lot to consider.
While size and location are important, none of it matters if the price is too high. Even if the price is great, it’s still crucial to get a good mortgage rate.
But what is the best way to get a mortgage rate in Florida? With so much information out there, it can get confusing to buyers. Even to those who have purchased homes before.
One thing for sure is that every savvy home buyer should do some comparison shopping before making a decision.
But there’s a lot someone should know before they make comparisons. Here’s what everyone should know when searching to find the best mortgage.
Figure Out the Budget
Anyone wanting to buy a home needs to start by looking at their current finances.
This will save time, since the same information will be needed by the mortgage loan officer. Here’s what information they will request during the mortgage application process:
– W-2 forms from the previous two years
– Profit and loss statements or 1099 forms (for business owners)
– Recent paycheck stubs
– Most recent federal tax return (They also may possibly ask for the last two tax returns)
– A complete list of debts, including credit cards, student loans, car loans and child support payments.
– List of minimum monthly payments and balances for debts
– List of assets like bank statements, mutual fund statements, real estate and automobile titles, brokerage statements, and records of other investments or assets
– Canceled rent or mortgage payments checks.
This will help the homebuyer understand more clearly what they can afford to buy. Same goes for what monthly payments they can easily make. There’s nothing worse than finding a dream home — then finding out it’s not affordable.
Choose a Loan Type
There is more than one type of mortgage loan to choose from. A great way to find a great mortgage rate is to understand what each type of loan offers.
The length of time a home buyer wishes to spend in their new home should also be factored into which rate is best for them. For those who don’t plan on spending more than 9 years in their home, an adjustable rate may not be the best way to go.
A fixed rate means the interest rate stays the same from the beginning of the loan until the end.
It cannot and will not change. Fixed rate mortgages tend to be for 10, 20, or 30 years.
A fixed rate is great for those with excellent credit but may be too difficult to obtain for those with poor or spotty credit. Also, if interest rates fall, there’s no way to take advantage of it.
The down payment is usually higher with a fixed rate mortgage loan. The best way to obtain this loan is by putting down 20% of the loan to avoid paying expensive mortgage insurance.
However, after several months or years, the interest rate will change and it will likely increase the amount owed on the loan each month. Usually, the interest rate is tied to an index.
The index may rise or fall and the mortgage payments will follow. Not all ARMs behave this way. Some limit the amount of each adjustment and set a maximum limit to how high or low the interest rate can go over the length of the loan.
If an adjustable rate looks like the best way to obtain a mortgage loan in Florida, you need to consider how high-interest rates and monthly payments might go with each adjustment.
Also look into how frequently the interest rate will adjust. Think about how soon the payment will begin to increase. Finally, find out if there is a cap on how high and/or how low the interest rate can go.
These questions will help a homebuyer understand better whether the loan is still affordable should both the rate and payment go up to the maximums allowed.
The Best Way to Improve a Credit Score
A home buyer’s credit score will count for a lot when obtaining a mortgage. However, sometimes things happen and a credit score isn’t as high as it should be.
Luckily, there are steps anyone can take to improve their credit score. This should be done before trying to acquire a loan.
Check Credit Report
The best way for someone to start is by taking a look at their current credit report. Anyone can get a free copy of their credit report.
Once obtained, it should be carefully checked for errors and wrong amounts of debt listed.
Should any errors be noted, report them immediately to the credit bureau. They are the only ones who can fix the errors. Do this first as the more time allowed for mistakes to be fixed, the better credit score will be reflected.
Set Up Payment Reminders
Sometimes, life gets busy.
Bills are forgotten or lost underneath a pile of clutter. It can happen to anyone. But missed payments also are reflected on credit reports.
The best way to avoid missed payments is to set up payment reminders. Or, if that’s still too much work, simply set up automatic payments to be withdrawn from a financial institution.
Reduce Amount of Debt Owed
Obviously, debt counts against getting a mortgage loan. So the more the debt is paid down before applying for a loan, the better chance a loan will be approved.
Find the best way possible to reduce monthly bills. Start cooking meals instead of ordering out or eating at a restaurant. The more debt reduced, the more money will be available to go towards a new home.
The Best Way to Increase the Down Payment
The more money that can go towards a mortgage loan, the better. Especially if there’s a way to increase the amount of the down payment.
For those buyers who are forced to put down less than the average down payment, mortgage insurance is often required to be purchased.
A larger down payment will also go towards lower the interest rate on the mortgage loan.
The Best Way to Find Great Mortgage Lenders
While it might seem that finding the best mortgage rates is the best and only way to find a lender, it’s not. Buying a home is an exhausting and emotional process. Here’s what else to consider when looking for a mortgage lender:
Ask Family and Friends
Referrals are often the best way to find a great mortgage lender in Florida. So ask friends and family members if they can recommend someone they’ve used in the past.
A good place to start looking for a mortgage lender is online. Not only will it be possible to look up the current mortgage rates, there’s a lot of information that can be obtained from an online search.
However, there is more than one type of mortgage lender. Here are the different types of brokers typically found online:
Online Mortgage Lenders
These are sites who underwrite their own loans. If approved, the loan comes directly from them.
Mortgage Loan Marketplaces
These marketplaces are paid a fee to generate leads for lenders.
Going through marketplaces will result in a lot of phone calls and e-mails from prospective lenders. Be aware that some lenders pay to be on top but may not necessarily be the best choice.
Local Mortgage Brokers
A mortgage broker is a middle person in the mortgage loan business. They lead the home buyer to lenders whom they work with. These brokers tend to be local rather than nationwide.
Traditional lenders tend to be local banks and mortgage companies in your area. More increasingly, these traditional lenders have moved the entire mortgage loan process to an online platform to make things easier and quicker.
Ask Questions and Take Notes
Do not be afraid to ask questions. The best way to find a great mortgage rate is to ask the lender a lot of questions. It’s how you can avoid problems in the future.
Hiring a lender shouldn’t be taken lightly. This is an emotional and difficult process that can sometimes feel overwhelming. The best way to find a great lender is to hire someone who is willing and able to answer any and all questions.
Above all else, it is imperative to feel comfortable with the mortgage lender. If the person is too aggressive, doesn’t listen, or seems angry, find another lender. It’s not worth the hassle.
Lastly, the best way to verify a lender is to look for the Nationwide Mortgage Licensing System lender number somewhere near the company’s name. Or try searching the NMLS database to verify if an online lender is legit.
Applying for a mortgage doesn’t have to be a scary process. We’re here to help make that process easy and seamless from start to finish. Connect with us today.