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Secrets to Getting a Mortgage
Bankers offer tips on getting a mortgage
June 28, 2010
Consumers who are thinking about getting a mortgage might consider taking a few steps that can improve their chances of qualifying.
Mortgage rates have fallen to the lowest levels since World War II, and the American Bankers Association has a few suggestions for prospective borrowers who are thinking about taking advantage of the situation.
The trade group says the first step is an "honest analysis" of all current monthly expenses in addition to a new mortgage payment. Other new expenses to consider include homeowner's insurance, property taxes and condominium association fees.
New homebuyers should additionally be prepared for home maintenance expenses.
ABA also recommends an assessment of credit scores -- which can determine whether the mortgage interest rate is high or low and even whether the loan will be approved. Most lenders either utilize the Fair Isaac Corp., also known as the FICO credit score, or the VantageScore.
Among steps consumers can take to strengthen their credit scores are making payments by the due date, minimizing the number of new credit lines opened and keeping credit card balances at no more than half of the available credit lines.
Consumers should also investigate, get quotes from and compare mortgage rates and fees among multiple lenders.
"You can find the right lender by going to local banks, which are regulated by the government," the group said. "And don't sign a final mortgage commitment until you understand all the terms and know exactly what you'll be paying in the future."
The last piece of advice from the bankers was to factor in closing costs, which can vary widely depending on the purchase price of the home and whether a real estate attorney or title/escrow company will be involved in the transaction.
By law, lenders are required to provide prospective borrowers with a written estimate of closing costs within three days of accepting a loan application.