By David Yanagisawa, Executive Vice President and Chief Lending Officer
With mortgage rates at historic lows, many first-time homebuyers and current homeowners are thinking now is the time to get a mortgage or to refinance. For some, taking the first steps can be a bit intimidating, but it need not be. A little preparation and planning can make the process go smoothly.
If you’re one of those thinking about taking out a mortgage or refinancing your home, here are six tips to help you get started and help you move quickly to secure a great mortgage rate when you are ready.
Tip 1: Good credit is key to obtaining a mortgage.
Under the Fair and Accurate Credit Transactions Act, you are entitled to receive one free credit report from each of the three national credit-reporting companies - Equifax, Experian and TransUnion - every twelve months. They sponsor the only authorized online source for a free credit report at www.annualcreditreport.com
. For more information on credit scores and tips on how to improve your score, read our blog post
on the topic.
Tip 2: Make sure you have all of your documentation.
All lenders have certain documents they need in order to qualify you as a borrower. For example, at Lakeland Bank we require items such as pay stubs, bank statements, and tax returns. Make sure you have these documents on hand and ready to go in the event you decide to move quickly to secure a great rate.
Tip 3: Review your budget and be realistic about how much you can afford to borrow.
Evaluate your personal lifestyle goals. Do you have any big expenses coming up in the future? How long do you plan to stay in your home? Are there any anticipated changes in your employment status? Talk with your lender about your budget to assure you borrow an amount you can afford. Try the MSN affordability calculator
to estimate the mortgage amount you could be approved for, but understand this is an estimate and not necessarily how much money you should borrow. You can also calculate your finances with one of Lakeland Bank’s many financial calculators
, which includes mortgage calculators to auto loan calculators.
Tip 4: Research the types of mortgages to find the one that is right for you.
There are a number of different types of mortgages available to consumers. Some come with varying terms (e.g. 30 or 15 years) and others feature fixed or adjustable rates. Most lenders have detailed information on their website explaining the different borrowing options they offer. To see an example of these charts, visit Lakeland Bank’s loan and mortgage
Tip 5: Keep good records of your finances.
You may be required to document all major deposits into your bank account over the last 6 months. For example, if you are a first-time homebuyer, and your parents are gifting you money to help with the down payment, you have to be prepared to explain that deposit into your bank account as well as other large deposits.
Tip 6: Timing is very important.
At any given time you may want to lock in a great mortgage rate and how wonderful would it be if you had all of your paperwork prepared and ready to go! By keeping these documents current, you will be ready to move quickly to take advantage of a low interest rate when the time is right.
The current low mortgage rates present great opportunities to save thousands of dollars. We hope these tips help you get started and on your way to purchasing a home of your dreams or refinancing the one you already own. To learn more about mortgages at Lakeland Bank, please give us a call at 1-866-224-1379
or “Like” us on Facebook
for more personal and business financial advice.
For more information on the relationship between the historic change in interest rates and refinancing, check out this chart from the Wall Street Journal. It shows the weekly refinancing activity and the rise and fall of mortgage rates dating back to October 2008.
: Phillips, Matt “Three Charts That Explain The Fed’s QE3 Plan” Wall Street Journal
, 14, Sept, 2012