Trying to foresee the situation with mortgages in 2017 is almost impossible. Relying on the prognoses of the politics is unreliable. Still, everyone, who is going to apply for a mortgage in 2017, shouldn’t give up on this idea.
Mortgage statistics in 2016 show that this year was quite profitable for purchasing houses in a credit. If you didn’t manage to buy your dream house, you can do it the following year and even benefit from the purchase. How? Learn from installment credit experts!
1. Forget about Sky-High Down Payment
Sometimes down payments of 20% and more prevent people from considering mortgage loans. Usually, sky-high down payments live in their heads only and have nothing common with the reality. There are lots of programs, such as Federal Housing Administration offers affordable programs of 3,5% and 3% first payment!
Such institutions as the Department of Veterans Affairs or the U.S. Department of Agriculture offer zero down payments programs for certain groups of people (veterans or those, who want to live in rural areas).
While applying for a small down payment is possible, remember that all financial operations through the credit cards must be protected due to the high number of credit card frauds.
2. Affordable Credit Score Issues
An average suitable credit score for mortgages must be over 750. The aforementioned Federal Housing Administration makes qualifying for loans with a credit score of 680-700 possible. Obviously, they have lenders, who would accept smaller scores but then the interest rate or the down payment will be larger.
3. Provide an Emergency Fund
During talking to your lender, you might be asked about the saving account. Most of the lenders want to be sure that a borrower will be able to pay off the monthly payments. Therefore, it’s important to provide information about the saving account or assets. Professional and reliable lenders will more likely require this information.
4. Consider Refinancing Your Loan
It’s possible to refinance a loan into the 15-year and 30-year loan. The first variant is more profitable, though contains larger monthly payments. Still, a borrower will get rid of the debt faster and the interest rate is usually lower.
You can apply for refinancing when you divorce, recover from the low credit score, give up on the mortgage insurance, or have positive equity. Make sure you are familiar with the ways to refinance the mortgage even when the rates are rising.
5. Don’t Jump Ahead of Yourself
Usually, we are chasing the fake dreams. While we are dreaming of buying Audi R8, our monthly salary doesn’t reach $2000. The moral is simple – apply for those houses, which you can afford. Don’t apply for a 30-year loan just to live in a luxurious house.
Between freedom and enormous debt, it’s crucial to choose debt-free liberty.
6. Be Cautious about Extra Fees
There are two variants to close extra fees and other closing expenses. Firstly, you can do it out of your pocket. This way, you can qualify for a lower down payment. Secondly, you can ask your lender to pay off a part of the fees.
Both variants have advantages and drawbacks. Still, if you are going to sell your house within a couple of years, you should ask your lender to pay extra expenses off. Otherwise, pay them from your pocket.
7. Organize Your Budget…
…until you don’t pay the debt off. It doesn’t mean that you can lose control and ravage your spending fund. It means that you have to manage your credit score and don’t apply for any other substantial loans.