Time and tide wait for none. The clock is ticking for the homeowners and the homebuyers who want to grab a low mortgage rate in the year 2014. After a long period of record-low interest rates, the prospective homebuyers and the homeowners are fretting over the predictions of rising interest rates through 2014. Although there are reports that the increase in the mortgage fees backed by Fannie Mae and Freddie Mac have been postponed, yet if you’re in the market to take out a home mortgage loan for the first time or for the purpose of refinancing your original loan, you need to take a cautious decision and know all the tricks and strategies to grab the best deal in the market. Buying a home and taking out a home mortgage loan is perhaps the biggest responsibility and a single mistake could take a toll on your finances and also on your wallet. Here are some steps that you can take.
1. Organize your finances: While underwriting your home loans in 2014, the lenders will be extra careful. The new mortgage regulations came into effect in January and the lenders are verifying the borrowers repayment capability according to the loan terms. Therefore, if you want to play a safe game and grab a low rate on the loans, you need to keep required documents regarding your finances. These are like - the bank statements, the W2s and the investment accounts. Prepare yourself to explain the reasons behind any unconventional deposit to your account. If your mom deposited $1500 into your account as a gift and you can not show the proper documents regarding that transaction, you could delay the closing of the home mortgage loan.
2. Lock in the mortgage rate as soon as possible: As per predictions of the Federal Reserve, interest rates will certainly rise to reduce the pace of the stimulus program that has helped the rates remain low. So, if you’re planning to take out a home loan in 2014, make sure you lock in the best mortgage rate as soon as possible and don’t wait for numbers that seem to be more favorable for your personal financial situation.
3. Opt for an immediate refinance: There are many homeowners who failed to refinance their mortgage loans at a lower rate after the rates jumped in 2013. But if you’re someone who is still paying an interest rate that is more than 5% on your home loan, you still have the opportunity to refinance your home loan. If you think it is possible to save through a refinance, but you’re not sure enough, you may speak to a loan officer. He will help you crunch those numbers to derive whether or not refinancing makes sense for you.
4. Use your bargaining power: As the mortgage rates increased, the lenders lost a number of refinance applications. But with the onset of 2014, they’re trying their best to get back a firm grip on the market and on their business. The homebuyers require taking advantage of their bargaining capability. Shop around, get multiple quotes from multiple companies so that you can choose the best loan in the market in accordance with your current financial state.
5. Maintain a good credit: You should also take good care of your credit score so that your lender doesn’t charge of having a poor financial history. Avoid doing any major purchase by using your credit cards. Do not ask your credit card company to lower your limits, and stay away from opting a new credit card. Make sure you repair your credit score as soon as possible so that you can prove yourself to be worthy to the lender. Pay off your debts by maintaining monthly payments in regular basis.
Apart from the above mentioned tips you should also work on to lower your debt-to-income ratio. Try to increase your savings per month so that you can borrow less that you are expecting. You can go for average rate mortgage for financing your new home if you are planning to keep the house for comparatively shorter duration.