- 1) Record Your Finances
A number of new regulations in 2014 will require lenders to verify the ability of borrowers to pay their mortgages. In order for you to get a mortgage this year, you’ll need to ensure that your bank statements are correct and make sure to have them ready. The lenders like to know every detail of your financial history before processing your mortgage request.
- 2) Lock a rate as fast as possible
It is good to note that as the new year begins, mortgage rates may increase. In order to be on the safe side, it is important to ensure that you lock into a rate as early as possible.
- 3) Refinance at this early moment
The previous year saw high mortgage rates that blocked people’s capability to refinance. However, if your home has a 5% interest rate, it is still possible to refinance. You may be thinking of refinancing as a way of saving money, and this is not a bad idea. Just talk to the experts for more advice on the topic.
- 4) Buyers are at an advantage
Lenders lose a big portion of the market due to increased mortgage rates. This market is lost to the home buyers, who provide stiff competition for the lenders in the refinancing business. If you are a buyer, take note of this unfolding and improve your returns this year.
- 5) Know the rights of a borrower
The Consumer Financial Protection Bureau has initiated a number of borrower rights to be used this year. In case of any complications with your mortgage processing, it is good to be aware of the provided privileges.
- 6) Nurture Your Credit
It is your credit that the lender will be considering while processing your mortgage request. For instance, if your credit score is above 720 marks, it is possible for you to acquire the perfect mortgage rate. Even a score of 680 will still attract good rates.
- 7) Avoid Extravagance
If you need a loan, it is important that your account remains with money after you pay all your other debts. Lenders do not want borrowers with more than 43% of their income being used to pay debts.
- 8) Think of alternative home loans for instance ARMs.
If you do not know for how long you may want to keep your house, the traditional fixed-rate loans would be ideal. However, for those who are aware of the time they may want to stay in a house, the ARM option is the best as it is cheaper in the end.
- 9) Beware of the consequences of an FHA loan
First time borrowers think that the FHA loans are easy to acquire and are cheaper than the conventional loans. However, the introduction of insurance premiums will make the loans more expensive to service. Therefore, people should try to get the conventional loans before opting for the FHA alternative.
- 10) Do not rush
Take it easy. Do not let the market rates force you into buying a home. Do it when you are financially and mentally ready.