When shopping for a mortgage, you know one thing to be true: you want to secure the best possible terms and conditions. Anything less than this will result in some level of regret over the long run.
The best thing you can do is compare a minimum of three to five lenders and loans. This will give you a clear idea of what each one has to offer, thus allowing you to head down the appropriate path.
Taking this one step further, look into steps you can take to strengthen your mortgage application. By doing so, you’re in a better position to negotiate.
So, this leads to the million-dollar question: what’s the best way to strengthen your position?
While there are many answers to this question, here are three of the best places to start:
- Boost your credit score: Review your credit report and credit score with an eye toward changes you can make for the better. For example, you can raise your score by paying down debt and avoiding new accounts.
- Save a bigger down payment: The larger your down payment, the smaller your monthly payment. Furthermore, this positions you to secure a lower mortgage rate. On top of all that, your lender takes on less of a risk when you have a large down payment. Save a minimum of 20 percent of the purchase price. This is a decision you’ll be happy with well into the future.
- Reduce your monthly debt payments: You want to reduce your debt to income ratio before applying for a mortgage. This improves your chance of qualifying for a mortgage, while also allowing you to secure a lower rate.
It’s not always easy to do one or more of these things, but you should have them on your radar as you inch closer to buying a home.
You want every lender you contact to realize just how strong your mortgage application is. You want them to want to do business with you. This puts you in a position of power, which can result in favorable terms and conditions.
Think long and hard about any steps — big or small — that you can take to improve your negotiating power.
When was the last time you applied for a mortgage? Were you happy with the process? Did you take any steps upfront to strengthen your mortgage application?