Buying a new home is always exciting. Seattle is one of the biggest cities on the West Coast. And because of that, the housing market can be quite competitive. As a result, established mortgage companies strive to offer the best rates to their clients.
If you want to find the right mortgage for your needs, here are a few tips that can guide you in the right direction:
1. Determine your credit score
Before you look for a mortgage company, finding out your credit score is a vital step. If your credit score is good, you can enjoy lower interest rates on different loans, especially mortgages. You can find out your credit score online through various websites. If your credit score needs some work, hold off buying a house until you build your credit. Otherwise, you will have difficulty securing an ideal loan.
Here are a few simple ways to raise your credit score:
- Control your credit card spending
- Pay your debts on time and in full
- Get a credit builder loan
- Become an authorized user on other people’s cards
- Avoid racking more debts for the meantime
2. Know the different types of mortgage
If you are not aware of the different types of mortgages, here’s a quick summary for you:
- Conventional mortgages. This type of mortgage is offered by lenders who are not federally-insured by the government. It’s the ideal type of mortgage for homebuyers who have good credit.
- Conforming and non-conforming mortgages. Conforming mortgages have a max amount of loans as dictated by the federal government, while non-conforming mortgages usually exceed that of conforming mortgages in terms of the max amount.
- FHA loans. These loans are offered by private lenders and insured by the Federal Housing Administration). Since lenders are insured, FHA loans can be given to people with low credit scores.
- VA loans. Qualified members of the military can acquire a government-issued VA loan, which they can use to buy a house.
- ARMs. Adjustable Rate Mortgages are loans with a fixed rate for the initial three to ten years, then fluctuate thereafter depending on the conditions of the market.
3. Save up for a substantial down payment
Generally, if you have more money put away for a downpayment, the more flexible are your choices when it comes to choosing a lender. A few years before buying a new house, save up money for a substantial down payment. At least 20% to 30% of the price of your target range should be good enough. By doing this, you also have the option of getting a shorter repayment term with lower interest rates.
4. Get referrals
Ask your friends, family, co-workers, and neighbors about their recommended mortgage lender. If they can point you to a lender that has a good reputation with great loan offers, you can narrow down your list of potential options.
Finding the best mortgage is just the beginning of your journey to becoming a homeowner. Once you find the one that works for you, you can finally own your dream house without going broke.
