(BPT) - Both the weather and the slump of the previous years’ housing markets are starting to thaw. It’s an exciting time of recovery and change. Whether you’re hitting the open houses, fixing up your home for sale, or just renovating, being fully prepared is key to a low-stress experience.
“Buyers and homeowners in today’s market still have historically low rates available to them,” says Navy Federal’s Vice President, Mortgage Lending, Katie Miller. “But they will need to follow a few steps to ensure they’re able to get the best deal possible.”
Miller shares her top five recommendations on how to make applying for your home loan a positive, stress-free experience:
1. Know where you stand
Knowing your credit history, score, and what you can realistically afford are the most important factors in seeing how lenders view you in 2014. It’s easy to check up on your own credit worthiness since you’re given one free credit report annually at www.annualcreditreport.com. Review it for mistakes, missed payments, and collection accounts and fix them before you apply for a loan. For a small fee, you can also find out your numerical credit score. Scores range from 300 to 850; overall, the higher your score, the better you’ll qualify for a loan.
2. Curb your spending
Remember, lenders are watching your credit report from the time you apply until the time you close. Sometimes even slight changes will bring up a red flag – so this is not the time to apply for any new credit, rack up balances, or make late payments. Cut unnecessary expenses and boost savings. Lenders like Navy Federal offer free online calculators to get a picture of monthly payments and how they’ll fit in to your budget.
3. Come prepared
Lenders want to make sure that you have the ability to repay your loan. Getting all your documents in order helps speed up the process when it comes time for getting approved. Your lender may require more information to complete your loan application, but having the following ready helps get things started: your last two pay stubs/Leave and Earnings Statement (LES), W-2s/tax returns for the past two years, and two months of bank/stock statements. Make sure you keep good records of your finances and can explain all deposits – including that birthday gift from mom and dad.
4. Know your options
Remember to make sure that the lender who pre-approves your loan is offering you the best deal – some lenders, like Navy Federal, even offer to match competitor’s rates. Look into all loan product options. A good lender will consider all of your factors to find a mortgage that’s right for you. Compare interest rates at financial institutions – even a half percentage point can lower your monthly payment and can save you thousands of dollars over the life of your home loan. This is also true of unnecessary or unexpected fees. Be sure to shop around.
5. Get all the hand-holding you need
Whether you’re a first-time buyer or you’re looking at how best to use your equity, you are considering a major financial decision. Find a lender who can work with you one-on-one from your first call to closing. You should feel confident that they are going to put you in the best loan for your needs.