You have been looking around for houses for sale in Washington, and you have a good idea of precisely what it is that you need, and how much you want to spend. You have been shopping around for a mortgage, but it is not easy. You know you qualify, but are sure that you can get a better deal than what most lenders are offering. So how do you go about getting the best deal on your mortgage? We will show you how.
- Consider the Best Mortgage Options
Before you sell your house and apply for financing, consider the mortgage options available. You have many options including fixed-rate mortgage, standard variable rate mortgage, and an interest-only mortgage, among others. Adjustable-rate mortgages, for example, are for a shorter period. You do not lock yourself into a 30-year mortgage, and can complete the payment over a shorter time. Ensure you stick to the time allocation; otherwise, the rates could rise significantly. Understand exactly what each option offers you have, plus what the money will cover.
- Know the Role Credit Scores Have to Play
Mortgage lenders will use your credit scores to determine whether or not you qualify for a mortgage for Washington houses. It also determines how much you get, and the interest you will pay. The best way to negotiate the best deal is to ensure that your credit score is high. You will get lower mortgage rates, thus making the process of owning one of the houses for sale in Washington a reality.
If your credit score is 760 plus, you increase your chances of qualifying for a mortgage. You can also negotiate for much lower interest rates than someone who has a credit score of 680. Most borrowers will not lend to someone who has a credit score of less than 620. You can, however, qualify for a bad credit loan, but be ready for extremely high-interest rates. Pay careful attention your credit score report and ask for regular reports. It gives you an opportunity to correct any inconsistencies or errors early.
Even with the poor credit score, you have the opportunity to improve it. It will require some discipline such as paying your bills on time, paying off debts, ensuring your taxes are in order, among other measures.
- Your Income Level and Employment Status
Many mortgage lenders will base their decision on whether you qualify or not, depending on income and employment status. You must show that you have been in steady employment for at least two years. The income levels should also be relatively stable and should not have shown any marked decline.
The situation can get very tricky for the self-employed. You must accompany your application with relevant documents such as tax compliance and business income.
- Do You Have Money for a Down Payment?
You may be thinking; should I sell my house and buy one of the houses for sale in Washington? If yes, make sure you have enough money to put a down payment, so that you can get better mortgage rates. Decide on the Washington houses you may want. Look at the pricing and then try to come up with at least 20% of the amount.
20% is not the absolute minimum; some lenders will accept lower amounts. You may, however, have to factor in private insurance, which can get as high as 1% of the loan amount annually.
- Shop Around for the Best Lender
In the same way you have taken the time to shop around for houses for sale in Washington, so should you for lenders. Looking for the best lender requires that you talk to multiple lenders. It allows you to explore different options, and find one that is suitable for your needs. The lenders will only be too happy to give you estimates or quotes. Get the services of a financial expert to help you understand the quotes if you do not know how to do it on your own.
Once you decide on the ones you may want to work with, it is time for a face-to-face visit. Meeting with the lender will allow you to ask any lingering questions. You can also gauge other factors such as the transparency levels and willingness to help. Within the mortgage period, you need to find some degree of compatibility with the lender. If you do not get a good feeling from the beginning, you need to continue shopping around until you get a good fit.
- Take on Additional Credit at the Time of Applying
One of the ways to improve your credit score is actually to open new credit lines. It would be a good idea to hold off just a little when you are applying for a mortgage. Taking out a loan or new credit will reflect on your credit score as a dip. It could, therefore, impact on the interest you will have to pay.
The same goes for making any big purchases outside of what you would typically spend in a month. The lender will do a credit check and the big purchase, unless it was a cash transaction, will reflect as new debt.
- Do not be Afraid to Negotiate
Do not forget lenders are human and are also in the business to make money. They are, therefore, not beyond allowing borrowers to negotiate for better rates. Ask them to give you a breakdown of all the fees. They will also have their costs outside of the mortgage, such as underwriting, or origination fees. See where you can get a discount or cost reduction so that you receive lower rates.
Final Thoughts
If you are looking for Houses for sale in Washington, you will require proper financing for them. You have the option of a mortgage, but it pays to know how to get the best rates. We have looked at some ways above, but you still need to do your research. Understand the mortgage process, the pros and cons, and how you can best maximize it. Most importantly; shop around and negotiate the best rates possible.