Expert Tips for Securing a Mortgage Loan

With economic conditions improving and mortgage rates at historic lows, now is an ideal time to purchase a home. However, market trends suggest rates might increase soon, creating a sense of urgency. Buying property is a significant financial commitment, and when choosing a lender, it's essential to consider more than just eligibility. Today, consumers have numerous options, making the choice of lender crucial for favorable terms. Selecting the right mortgage provider can impact your financial future, so thorough research is key.

Below are five essential tips for homebuyers seeking mortgage financing, along with recommendations for top lenders in 2017. Use these insights to ensure a smooth borrowing experience.

Assess Your Financial Health Before Applying

Purchasing a home is often the largest investment someone makes, with mortgages spanning 15 to 30 years. Ensuring your finances are stable beforehand is vital to qualify for favorable loan terms. Poor financial standing can lead to disqualification due to lender policies, so it’s advisable to improve credit scores and save diligently prior to application.

Evaluate Down Payment Options Suitable for Your Budget

Typically, down payments range from 10% to 20% of the home’s price, requiring substantial savings. Building such funds can take years, but many lenders offer flexible down payment programs tailored to different financial situations. Research various lenders and explore internet resources to find options that align with your capacity to pay.

Understand Different Loan Types

Mortgage options vary, and selecting the right one depends on your long-term plans:

Fixed-Rate Mortgages (FRM): Ideal for those seeking predictable payments over 15 to 30 years, offering stability despite potentially higher overall costs.

Adjustable-Rate Mortgages (ARM): Suitable if you plan to stay in the home short-term, with initial low rates that adjust periodically, capped for protection.

Be Aware of Closing Costs

Beyond the down payment, closing costs—typically 2-5% of the loan amount—are crucial to consider. Larger home prices mean higher closing costs. Request detailed estimates from lenders early on to include these costs in your budget and avoid surprises.

Opt for Fixed-Rate Loans When Possible

Fixed-rate mortgages remain preferable for stability, especially when interest rates are low. While ARMs may seem attractive during times of low rates, their fluctuating nature poses risks. The optimal time to purchase is when fixed rates are at their lowest, ensuring predictable payments over the loan term.

Top Mortgage Lenders of 2017

Choosing a trustworthy lender is crucial. The best lenders share common qualities: competitive rates, accessible online tools, prompt communication, and excellent customer service. Reliable lenders provide comprehensive guidance throughout the process for a stress-free experience.

Leading options include Quicken Loans, Alliant Credit Union, Citibank, First Internet Bank, and New American Funding. While rates vary, these lenders are known for transparency, support, and efficient service, making them excellent starting points for your mortgage journey.