Mortgage 101

Shopping for a Mortgage

A step by step guide to help you find a mortgage

Whether you’re getting financing through a traditional bank or going online, this step-by-step guide may help you find a mortgage that best meets your needs:

#1: Know Your Credit Score
Lenders will check your credit score to see if you qualify for a mortgage and will charge an interest rate accordingly.
Typically, the higher your credit score, the better terms you can expect. Do what you can to put your best financial face forward before you start requesting quotes.1

#2: Learn About Rates
Mortgage interest rates fluctuate on a daily basis and can vary by state. Find out what the average rate currently is on a fixed rate and adjustable-rate mortgage (ARM) so you have a baseline for comparison.2

#3: Get Quotes from Multiple Lenders
A lower rate may help you save money on closing costs. It’s a good idea to shop around to get rate quotes from lenders who have a good reputation and high ratings.
Getting at least four quotes from mortgage lenders plus your bank may put you in a better position to negotiate.

#4: Review Points
Some lenders may give you the option to buy “discount points” to lock in a lower interest rate. Calculate the savings on interest to see if this is a good financial move for you.4

#5: Understand Down Payment Requirements
Review your options to find a program you qualify for that meets your needs.
In 2017, the median down payment on a detached home and condo was $20,000 on a $263,000 purchase, or 7.6%.5

#6: Add Up Fees
Every lender charges different fees, which are included in your closing costs.
Comparing different mortgage programs’ fees can help you make an informed decision.
Typical lender fees may include: application fees, processing fee, origination fee, underwriting fee, tax services, credit report fee, appraisal fees, and other administrative fees.6

Sources:

1https://better.com/content/how-your-credit-score-affects-your-mortgage/

2https://www.bankrate.com/finance/mortgages/how-lenders-set-rates.aspx

3https://themortgagereports.com/26016/shopping-for-a-mortgage-how-many-mortgagequotes-do-i-need

4https://bettermoneyhabits.bankofamerica.com/en/home-ownership/buying-mortgage-points-lower-rate

5https://themortgagereports.com/34892/down-payment-amounts-are-up-heres-whatyou-need-to-know

6https://themortgagereports.com/34892/down-payment-amounts-are-up-heres-whatyou-need-to-know

Disclaimer: This is not a commitment to lend. Prices and guidelines are subject to change without notice. Some products may not be available in all states. Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision.

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