Anyone who is dreaming of owning their own Huntsville home has started the planning process. Researching the perfect neighborhood, thinking of just the right number of bedrooms, and even planning out how they will decorate their future home. However, the research that needs to be done is about the mortgage needed to buy that Huntsville home.
The more a Huntsville buyer knows about mortgages the more prepared they will be once they need to shop for the right lender.
A mortgage is not something a person goes to get in one day. The process should start well before shopping for a Huntsville home takes place. At least three months before wanting to buy a Huntsville home a buyer should look for a mortgage. The more time they take, the better.
One factor that is going to greatly influence a person’s ability to get a loan is their credit score. It is the first thing a lender will want to look at before offering them any type of loan or interest rate. A person going in with a bad credit score is going to have a difficult time.
Learning where this score is can be very helpful for a Huntsville buyer. Lenders can offer advice on how to increase the credit score by showing what parts of the report are dragging it down. Fixing a credit score can take months or years depending on how damaged the score is.
Interest rates are so important on a mortgage. While even a percentage or two does not seem like it would make a difference, it can mean thousands of dollars in payments over the life of the loan. That is why a Huntsville buyer must shop for the lender that will give them a good rate so long as the other loan terms are good, as well.
A potential Huntsville buyer can help themselves get a better rate by increasing their credit score. A high credit score will mean a lower interest rate. There are many Huntsville buyers that are able to get a mortgage with a terrible credit score but they also have a very high-interest rate. This only adds to their debt.
There are other costs to buying a Huntsville home beside the purchase price. Closing costs are various fees charged to a buyer for agencies to perform actions like transferring taxes. Many of these fees are set in stone, but there are some that can be changed. Look for a lender that is offering the best deal on closing fees.
This can be done while talking with the lender. Lenders will provide a good-faith estimate. This estimate will let the Huntsville buyer know the terms of a mortgage as estimated at the time. This can include the interest rate they will offer and the closing fees associated with the loan.
A Huntsville buyer that has decided on a certain lender may be excited about their interest rate. If they go through the process, the lender may even provide them a pre-approval letter that shows they will offer money for a mortgage under certain conditions. Most of the time this approval is only good for a few months.
Something to consider, though, is that the interest rate is not locked in. The buyer will not know their rate until a purchase agreement is drawn up. Some lenders will work with a buyer to lock in a rate for a period of time while they shop. Some will go as high as three months while others will only provide one.
Mortgage shopping has to be part of the Huntsville home buying process. Going with the first lender that a buyer visits can lead them to pay more in interest and in closing costs. A smart Huntsville buyer will know the right questions to ask and shop around before dedicating themselves to one lender and a mortgage.