7 Ways to Unlock the Best Home Loan
Home sales should speed up this year. Mortgage rates in 2016 were low. Everyone is wondering, “Will rates remain low in 2017, or rise with little room to fall?” Whether you are buying a home or refinancing your home loan, here are seven tips for accessing the best mortgage in 2017:
1. Get an FHA loan with imperfect credit
Federal Housing Administration-insured loans are available to borrowers with imperfect credit. Last year, FHA homebuyers averaged 686, while conventional homebuyers scored around 753.
2. Save by refinancing into a 15-year loan
While mortgage rates may rise in 2017, some homeowners will have reason to refinance. There are several refi triggers, even when rates rise above record lows:
- Recovering from a low credit score
- Eliminating mortgage insurance
- Achieving positive equity
- Cashing out equity
- To save money in the long term
3. Borrow within your means
Too often, people ‘stretch’ their finances to make initial payments hoping their income will increase over time. But it’s a smarter bet to live within your means. You should move up to a more expensive home after your income rises, not before. Your monthly obligations should not exceed 36 percent of your gross income.
4. Look into no-closing-cost mortgages
Typical mortgages have thousands of dollars in fees and closing costs. But you may accept a higher interest rate for your lender to pay some or all the closing costs.
5. Get a VA loan for zero-down
Veterans Affairs guarantees mortgages for service members, veterans, and eligible surviving spouses. In 2016, the VA backed one-eighth of mortgages. A 2010 survey showed that many homebuying veterans didn’t know about VA loan benefits. The main feature of VA loans is they can be used to buy a home without a down payment.
6. Consider a cash-out refi
A cash-out refi is when a homeowner refinances their mortgage for more than the total owed, and pockets the difference. Another way to get cash from equity is via a home equity line of credit or loan.
7. Be patient during the underwriting process
Keep your finances as simple as possible between application time and closing. Don’t use your credit cards or apply for new credit during the underwriting process. When you apply, the lender examines your credit. Then, before closing, the lender will survey your credit again. If there is a significant change, the lender may have to delay closing. In some extreme cases, you could risk your mortgage approval and have to repeat the application process.
Call (888) 892-4070 to learn how we make the home loan process easy.