In the Lone Star State, you can find a lot of options when it comes to home shopping. From country homes to small apartments, the possibilities are endless. But, you should decide wisely according to your budget and housing needs.
One thing that matters above all is finding reasonable mortgage loans to finance your purchase. For many people, buying a house in Texas is a one-time investment that requires a substantial mortgage. You will be in the situation for a long haul, which means you need a healthy relationship with your mortgage lender.
There is no shortage of lenders who may be willing to take your application and gain your business. But, it involves sifting through various options to settle on the best one. Here are some tips to help.
Check Your Credit Score and Fix It
Your credit score decides if a lender will approve your application and on what terms. It has to be strong, so you can stand a chance to get mortgage loans. A low credit score makes you risky for the lenders, and you have to face higher interest rates. But, if you can score above 620 in Texas, you have better prospects to negotiate with potential lenders and bag a better deal.
In case of poor ratings, check your credit reports to look for delinquent accounts, late payments, or accounting errors. Take steps to move up your credit score by paying off your bigger debts and lowering other dues as quickly as you can.
Also, pay attention to your debt-to-income ratio that shows lenders your ability to handle your existing debts plus a new mortgage. You can keep it manageable by avoiding large purchases on your credit cards or new loans for three months before mortgage application.
Evaluate Your Options
Before setting up the quest for a mortgage lender in Texas, it is wise to know your options. Since mortgages can differ according to needs, you should find the right one to buy your dream home. You may apply for a conventional bank loan or go for government-insured credits, like FHA, USDA, or VA loans.
Other options include fixed-rate mortgage loans and adjustable-rate lending. A fixed-rate mortgage offers stability with a constant interest rate throughout the term, while adjustable-rate mortgages start with a lower interest rate and continue with a variable one. They are a lot more unpredictable than other types.
Understand each option and make an informed decision based on your needs. And preferably, choose a lender providing all these options.
Compare the Mortgage Lenders
Know about the lending landscape so that you can level the playing field. Luckily, you have several options to select the right mortgage lender. They include:
- Credit unions offering favorable interests to their shareholders
- Mortgage brokers working for the lending institution on a brokerage basis
- The traditional loan from your bank
- Dedicated mortgage firm that can process your application faster than any other type of lender
Once you know all these options, don’t settle on the first lender you talk to. You can rate-shop with several lenders to ensure that you get the best deals on fees, interest, and loan terms.
Some lenders may also offer better services than others, in a way you prefer. Whether you like online communications, text messages or in-person chats, discuss your preferences beforehand with your mortgage lender. If you wonder why you should shop around, consider this:
Research says that borrowers can save about $1500 on their lifetime debts by getting one additional rate quote and make a saving of $3000 by asking for five. It is a big amount that you can save by searching through Nationwide Multistate Licensing System Registry or Better Business Bureau ratings.
Apply for a pre-approval from 3-4 lenders for better comparisons on various offers. It will get you the exact loan pricing as each lender will thoroughly review your credit ratings and current financial situation. However, you need to provide specific details to apply for pre-approval. It may include your government-approved photo ID, social security number, residential address, pay stubs, federal tax returns, bank statements, and other income-related documents.
Even if you get a mortgage pre-approval, your application can still be in jeopardy if the lender rechecks your income histories and credits to find any new discrepancy. Hence, you should hold tight and lay low for a while after pre-approval unless you get the mortgage.
Be Attentive and Don’t Miss Any Fine Print
Once you narrow your lender choices, get more attentive, and ask the right questions. Any errors or misjudgment on your part can lead to remorse later on. Check the turnaround time of each mortgage lender for pre-approval, appraisal, and mortgage closing. Ask about their fees and any waiver available. Don’t forget to check the down payment requirements, too.
Sometimes, a lender may offer you credit to lower the amount of cash due for closing. Be wary of these offers as such credits carry higher interest rates. Another important check is to look for third-party costs like title search fees, lenders title insurance, transfer taxes, appraisal fees, recording fees, and administrative charges. You can mostly negotiate the final closing costs, but the lenders do not set the third-party service fees.
Mortgage lenders may also ask you to deposit earnest money to kickstart the loan process. You should be clear about the circumstances under which this money will become non-refundable. If a lender refuses to define clear terms, shop around for other options.
Lastly, look closely at the fine print of your loan documents and check the following:
- Exact finance terms
- Items included or excluded with the home
- If there is a home inspection contingency
- The closing date
- Errors in the paperwork like misspelling or wrong bank account number
With proper homework on the principles and necessities of mortgage loans, you can avoid last-minute surprises and save trouble. It will acquaint you with the industry and help you identify the best lenders out there.
Even after finding a mortgage lender and obtaining your loan, try to keep your credit under control and avoid opening a new credit line unless you can handle it.
Contact Supreme Lending for your mortgage. Give us a call: 972-656-0826