These 8 mortgage tips from MSN Real Estate can help you with your decisions in 2014:
1. Document your finances. With the new mortgage rules going into effect this month, lenders will be extra diligent when underwriting loans. Make sure to keep records of your finances, including bank statements, tax returns, W-2s and other assets you own. Lastly, be ready to explain any unusual deposits to your accounts to help close your loan faster.
2. Lock a rate as soon as you can. Rates will likely increase during the year with the Federal Reserve reducing the pace of the economic stimulus program. If you are planning to get a mortgage, lock in a rate as soon as you are able to.
3. Refinance now – if you still can. Those who are still paying more than 5 percent interest on their home loans might still have an opportunity to refinance at a lower rate. It doesn’t hurt to try. Talk to a loan officer and have them look over the numbers.
4. Buyers, use your bargaining power. Lenders lost a big portion of their refinance business when mortgage rates increased. This year, they will give more attention to homebuyers thus creating more competition. Buyers should take advantage of bargaining power and should shop around for the best deal and look beyond the interest rate on the loan.
5. Learn your rights as a borrower. Mortgage borrowers will get more new rights as consumers when the new mortgage rules go into effect this year. Make sure to be aware of your rights so you don’t run into any problems.
6. Take good care of your credit. If you are planning to get a mortgage, make sure to monitor your credit history and score until your loan closes. For the best rates, keep your credit score around 720 or above.
7. Don’t overspend. Lenders won’t want to give you a loan if you have little money left over at the end of each month. Try to keep your debt obligations below 43 percent of your income.
8. Consider alternative mortgage options such as ARMs. Depending on your plans, and how long you think you will keep your house, there are many different mortgage options. Rates on adjustable-rate mortgages can be as much as one percentage point lower than on fixed-rate loans. Although if you don’t know how long you plan to keep your home, a fixed-rate loan may be the better choice.
This article can be found in its original form on MSN Real Estate.
Photo: Total Mortgage