Be a savvy home shopper in 2013 with top 10 mortgage tips

It has become very challenging to obtain a home loan after the property market crisis. In 2013, this is going to be no different. You need to follow some practical mortgage tips in 2013.

Lending standards have been very tight in recent times. This trend is not likely to change in 2013. The mortgage rates are hovering around historic lows. The rates may see an upward tendency in the near future. Keeping all these probable developments in mind, you need to decide your strategies. Here are 10 mortgage tips for 2013. These mortgage tips will help you strengthen your position in the property market.

1. Be prepared for higher rates

The rates on the mortgage are very low now. No one knows when the rates will start rising. Assuming that rates will rise, you need to keep aside money for higher mortgage payments in near future. If your finances permit, you can also pay off your mortgages faster so as avoid paying more in future.

2. Hurry up to pay down mortgage principal

If you get chance and if you are financially capable, then don’t lose the chance to pay down your principal loan amount. You need to however factor in the pre-payment penalties. You can switch from monthly to bi-weekly or weekly payments to pay down mortgages faster. You can also channelize the tax refunds for mortgage payments.

3. Clean your credit

In these tough lending conditions, it’s difficult to get a loan with a low credit score. You need to follow best financial practices so as to improve your credit score. You need to obtain your credit reports from the 3 major credit bureaus. Thereafter you have to examine the reports very carefully. You need to apply for a loan only after resolving all the issues in your credit reports.

4. Consolidate your outstanding debts

In addition to the mortgages that you are paying, you may also carry high-interest unsecured debts. You need to roll all these outstanding debts into a low-rate loan. This will actually help you save a lot of money. You can use this money to pay down your home loan.

5. Keep your documents ready

If you apply for a mortgage, the lender will ask for the relevant documents. You need to keep all the important documents such as W-2s, bank statements, pay stubs, income-tax returns etc. ready with you. If you can’t provide these documents on time, your application may get rejected.

6. Shop well to get the best loan

You need to shop around to get the best mortgage rate. In addition to mortgage rate, you should also take into consideration the type of loan, closing costs, discount points etc. This kind of comparison will help you get the best loan.

7. Get estimate of your affordability

Don’t depend entirely upon the lender on the maximum amount that you can borrow. Keep in mind your current financial conditions and get an estimate of your affordability. You can also get the help of an online calculator to estimate your affordability.

8. Don’t make delays

Once you apply for a home loan, you should not make delays in sending your documents to the lender. If you make delays in closing, your loan may be denied. Due to delays, you may be denied to get the loan at a rate that you locked in at.

9. Use gifted money for down payment

It sometimes happens that your parents or in-laws have gifted you money for making down payment. But, you should have proper documents which unquestionably prove that it’s a genuine gift. You can use this gifted money for making down payments for both FHA loan and the conventional loan.

10. Get proper mortgage help

You may not be comfortable in taking out a home loan on your own. It would be wise to get the help of a real estate expert. The real estate expert will help you find the best loan.

These are the top 10 mortgage tips for you. By following these 10 tips on mortgages, you will be able to come close to fulfill your dream of owning a home.