By Ismat Sarah Mangla
April 30, 2012
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| photo: thinkstock |
(MONEY Magazine) -- Finding an affordable house is no longer a
problem but qualifying for a mortgage can be. Six tips to getting a
mortgage and a good rate.
Put your credit on ice. The
higher your credit score, the lower your rate: The best rates go to
those with a 760 or more, says credit-score expert John Ulzheimer.
So keep that plastic in your wallet (and don't apply for new cards or
other loans) for at least three months before you go loan shopping. One
large balance -- even if it's paid off at the end of the month -- can
ding your score by 20 points or more.
Ask for time. Most
sales contracts give you only 10 days to nab a loan or the seller can
move on. Negotiate for an additional five to 10 days to give you some
room to shop around.
Get at least six quotes. Rates on a 30-year fixed conforming
loan can vary at least as much as a quarter of a percentage point. Get
quotes from national lenders at mortgagemarvel.com and find out what
your local credit union or regional bank is offering as well. Inquire
about fees; while lenders aren't required to give you a good-faith
estimate of closing costs (which average 2% of the loan balance) until
you actually apply, some will provide it if you ask.
Match the lock period to the loan. You
now need 60 days or more to close a loan, says Wharton professor and
mortgage expert Jack Guttentag of mtgprofessor.com, and getting an
extension on a lock will cost at least a couple hundred dollars. Ask
your lender how long it's taking to close loans like yours -- and don't
lock for less.
Opt for an ARM. If you know you're not going to be in a house
for more than seven years, adjustable-rate mortgages can mean big
savings, says Guttentag. The monthly payment on a $300,000, seven-year
ARM at the recent rate of 3.23% is $1,302, vs. $1,455 for a 30-year
fixed at 4.13%.
Talk to a broker. Those who need a jumbo loan or have an
unusual situation (say, you're self-employed) will get the best deal
from a mortgage broker who has access to and experience with a lot of
lenders. Find a fee-only one at upfrontmortgagebrokers.org.
Source: CNNMoney
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