Making the right selection regarding an appropriate mortgage type and term is likely among the foremost important financial decisions a consumer is to make. The slightest variance in mortgage rate can make the largest difference in your overall monthly expense.
Start by being ahead of the game by obtaining a copy of your credit report. Pull your report from the 3 major credit reporting agencies and be sure to scan it carefully it for any errors or omissions. Inaccuracies such as false reporting, etc, can cost thousands of dollars in added interest and can even be attributed to denial of credit. An estimated 50% of all consumer credit reports contain errors, so be thorough when it comes to verifying your report's content.
Watching the mortgage market is imperative. Be sure to plan ahead and track movements in interest rate averages. Always be aware of current mortgage rates and check rate forecast columns to see how they are fluctuating. Understand that there are many factors which can affect mortgage rates. Know when to lock interest rate on mortgage paperwork.
Mortgage rates typically rise and fall along with Treasury note and bond yields. These particular government securities reflect the overall state of our economy and sway the direction of mortgage rates.
Investigate the options available to you through online mortgage company resources and local banks. Make a sound decision as to exactly which mortgage program is the best for your family or financial long term interests. There are numerous choices available including fixed rate mortgages, ARM (adjustable rate mortgage) and others including a jumbo mortgage. Jumbo simply means the loan amount is to exceed $359,650.
When deciding which mortgage company program is best, weigh the following:
How long are you planning on occupying the home and staying with the loan you choose?
What monthly payment can you afford? Have you calculated your anticipated monthly payment at a low rate? If purchasing, how much do you intend on investing as a down payment? Do you intend to pay the mortgage off early? Are you planning to make extra payments toward the principal amount?
Is your income solid? Will the dollar amount you are paid remain stable, decrease or increase over the next 15 to 30 years?
Once decision has been made to roll with a specific loan program begin shopping interest rates among local and lender resources. To be thorough, compare mortgages offered by a number of lenders before committing. When making comparisons be sure to look at all the miscellaneous fees. There are a cornucopia of fees associated with a mortgage that sometimes tack-on thousands of dollars to the overall cost of the loan.
Article by Stockton Marquette
Economic Analyst and Mortgage Industry Advisor/Forecaster
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