Getting Your Ducks in a Row for a Mortgage Approval Five Tools for Success
Posted by Eric Skates on
Getting Your Ducks in a Row for a Mortgage Approval-
Five Tools for Success
In the current housing market, it is worth it to be as strategic as possible when seeking out a mortgage that will work for you. For most individuals, getting into the housing market starts with a mortgage approval. There is actually quite a bit of homework you can do ahead of time that will help you lock in a workable mortgage rate. Here are five things to remember when getting started on the mortgage process.
1. Understanding Market Trends
While there will always be speculation circling the housing market, there are some trends that can be easier to identify and may bear more weight. When it comes to taking down your own mortgage and home buying strategy, take into account long-term trends over spikes in the market. A steady price increase in the local housing market that hasn't lost momentum in years might be something to keep an eye on. There may also micro trends within your community, such as a boom of Millennials hitting the housing market and raising prices within and around urban environments.
2. Partnering With A Mortgage Company
Someone with the knowledge and know-how to guide you through the process of acquiring a mortgage can be invaluable. Sometimes it can be hard to know where to start when it comes to getting documentation in order, and having a professional review your portfolio for holes will help with pre-approvals. Since most people go through the mortgage approval and home buying process so infrequently, it is a great idea to get help from professionals, especially if you live in a location that currently is a seller's market.
3. Understanding the Big Picture
While you might be worried about interest rates and payment plans, don't forget that you will have refinancing options down the line. While you should never lock yourself into a mortgage rates or timeline you can't feasibly afford, don't forget that the economy can change in the future and you may have more options down the line than you do today. By looking at long-term trends over time, you can estimate what a home might be worth in the future, and if you can refinance to lower your mortgage payments moving forward. While you can't bank on these trends, you will be paying down your current mortgage and have equity in your home, which can make your situation feel less finite.
4. Focusing on What You Can Control
While there might be market fluctuations and experts warning of changes to come, it is important to establish what your situation is, and work within your own parameters regardless of trends and changes that might be going on. Work on improving your credit score if this is less than optimal. This will help lower your mortgage percentage rate no matter what external trends are looking like. Look into all funds you may have available for a down payment, including old retirement funds, gifts from family members, or establishing a savings plan that works for you.
5. Being Realistic About What You Can Afford
Once you have met with a mortgage broker and have reviewed all options for a down payment, you will have a much clearer picture of what you can afford. Be sure to keep your budget in mind when house hunting to make sure you don't waste time looking at homes outside of your scope. Pre-approvals are usually a good indicator of what you will be able to lock in for a future mortgage, but the real estate and finance world shift quickly. Once you have a budget, focus on finding homes and putting in offers so that you can make sure you are able to lock in the mortgage rate that works for you.
If you can get your financial details in order, you can dedicate more time to the home buying process and will be more equipped to find a home suitable for your needs. Locking in mortgage rates at the level and payment amounts that are workable for your family will help make the overall home buying process a success.