First and foremost, you need good credit scores. So if you don’t know yours, order your free credit report with scores and see where you stand.
If you see a number lower than the high 700’s, carefully note the reasons why given with your online credit report and get to work on making necessary changes. Be sure to go over it carefully to find any errors that could be affecting your credit scores. If you find one or more, contact the credit bureau to correct them.
If you have any late payments in your history, start making all payments on time and wait for 6 months before making a home mortgage application.
Begin paying down your credit card debt, and shift your liabilities so that no card shows more than 50% usage. Meanwhile, don’t apply for any new credit cards or consumer loans.
While you’re doing this, work hard to build at least a 20% down payment.
The higher your credit scores and the larger your down payment, the better mortgage interest rate you’ll be offered.
But that’s not all… once you become a “most desirable borrower,” you’ll also be in a position to shop around and to negotiate.
Most consumers don’t realize that different mortgage lenders offer different programs, and very few realize that yes, you can negotiate with lending institutions.
Make the necessary calls so you know what the best deal really is, then use that information to negotiate with the lender you prefer.
Lenders who want your business are likely to negotiate on the interest rate, the points, and various fees that are routinely tacked onto your loan closing costs. For instance, some banks ask you to pay their attorney’s fees. Tell them about another lender who doesn’t charge this fee and ask that it be removed.
Document preparation fees are included in most loans, but a lender who wants to keep you can drop it all the way to zero.
If you’re required to pay a loan application fee, ask that it be credited back if you accept their loan. Note that not all mortgage brokers charge an application fee.
Remember that the interest rate is just one part of the big picture and every dollar you pay in fees is a dollar you can’t put toward the down payment. But do pay attention to the interest rate and the points. Ask how many points you would need to pay to bring your interest rate down. Then have the mortgage broker show you the real numbers. Compare their figures to rates/points quoted by other lenders.
The first step is knowing your credit scores, so order your free credit report with scores right now and get started.
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