Five Tips to Have the Best Mortgage in 2017 And Beyond

The dream of having an own home is held dearly by many. Thoughts of not worrying about rent, redesigning the house according to one’s theme, and a possibility of extending some sections to become a landlord make owning a home a top priority for most Americans. In this post, we look at five main tips for getting the best mortgage in 2017 and beyond.

You can get a mortgage right away with a down payment or even none at all

There is a common perception that you cannot get a mortgage without contributing 20% of the down payment. Though most lenders ask for this amount, it is not the rule. There are mortgage companies that only require 10%, 5% and even 3% to qualify you for the mortgage.

If you follow carefully, there are other mortgages that require 0% deposit. For example, the Department of Veterans provides a zero-down mortgage for members who qualify. In the same way, the Ministry of Agriculture and Navy Federal Credit Union also offers 0% down payment mortgage.

If you have imperfect credit, consider going for an FHA loans

If you have poor credit, securing any form of a loan including mortgage is very difficult. However, you can still get a mortgage by going for the federal housing administration loans. By the close of 2016, FHA had about 686 homebuyers with the average credit score of 753. To qualify for an FHA loan, you are required to have a credit score of more than 580 and a down payment of 3.5%. For those with a lower credit score between 500 and 579, a down payment of 10% is required. Note that to get an FHA loan, you need to identify a lender to approve the loan.

Have ample saving reserve

Many lenders including those issuing mortgage, appreciate their clients have monthly expenses. When you start making payments, they appreciate that inability to meet monthly expenses will raise the risk of default. Many lenders will, therefore, calculate the minimum reserve for clients to qualify for the mortgage they are applying for. It is because of this that they ask for a deposit of 20% to avoid the need for mortgage insurance.

Only borrow what you can comfortably repay

When people are looking for mortgages, they stretch so much to make monthly compared to how long their income can go in the long term. However, it is very important to only live within your means. As opposed to starting higher than your income can meet, it is advisable to start low and move up as income grows. Here, the rule is that all monthly expenses that include house payment should never surpass 36% of the monthly income.

Be extra patient when underwriting

During the underwriting stage, it is important to be as steady as possible. While this might look simple, it is never easy to attain. This means not charging the credit cards, and not applying for new credit when the process of underwriting is underway.

Lenders are always looking for your credit report and credit score between application and underwriting. If the lender decides to recheck your credit report before closing and notes substantial changes, the mortgage might get delayed. You might even be forced to reapply once again.