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Mortgage rates are slightly above 5 percent, which means to save every penny, you’ll need the best real estate lenders to get you the best deal. Higher interest rates mean you’ll pay more over the long term.
You should know a few things when choosing the best real estate lender, including cleaning up your finances and selecting a mortgage that’s right for you. Also, you shop around for the best lender.
Check out these tips in choosing a real estate lender.
Clean Up Your Finances
Private real estate lenders will begin the mortgage process by getting your credit score. The higher your score, the better your rate.
You can check several places online to get a free credit score check, but it’s best to pay down as much debt as possible before applying for a real estate mortgage.
Applicants should strive for a low debt-to-income ratio (DTI). Your DTI compares how much you owe with what you earn each month. Real estate lenders will look at this to determine your borrowing risk.
Moreover, make sure you have no marks against your credit score, including late payments, collections, bankruptcies, or liens.
Select a Mortgage
There are plenty of mortgages to choose from, including conventional, Federal Housing Administration (FHA), and Veterans Administration (VA) loans.
The federal government does back conventional loans. You can put 3-percent down, but you have to purchase private mortgage insurance.
Qualifying low-income first-time homebuyers can get an FHA loan, which requires a small down payment. You must purchase mortgage premium insurance to protect the best lenders from default.
VA loans go to qualified veterans, and you can finance 100-percent of the purchase price, meaning no money down.
In addition, there’s another loan program through the U.S. Department of Agriculture. If you buy a home in a rural area, you may qualify.
Shop Around
Looking for the best lenders means shopping around for the best deal. A private lender will give you a loan estimate (in writing) about the loan terms. This is your time to ask questions and clarify any details before signing the paperwork.
It would help if you got quotes from at least three of the best lenders. A tiny change in the interest rate can save you a tremendous amount of money over the life of the loan.
A Home Buying Guide from Real Estate Lenders
Purchasing a home requires you to know several things from real estate lenders, including getting your finances in shape and selecting a mortgage. It’s also important to shop around for the best deal.
Buying a home is a crucial step, and for many, it realizes a lifelong dream. The best lenders will help you achieve that dream!
Please read our website for more information about private lenders and the home buying process. With rates constantly fluctuating, you’ll want to lock in the best deal when it’s available!
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