Home Mortgage: Tips for landing a mortgage under new government

The new President and his government are trying their very best to get normal flow of money back into the housing sector. The present rate of 5% for a thirty year mortgage is a relief which has got people interested in the market again. The people of America are waiting and tracking the housing markets. Money has started to be introduced again and is available for the prospective buyers. The problems that these people would encounter are going to be very different from the times when getting a loan was very easy. The credit scores and standards have been raised. Till previously, there were many different types of loans available. It was like the lenders just wanted to give money in every possible way. Presently, many loans have been scrapped. Thus the choice of loans has reduced. The most important factor that would affect the new borrowers is the lack of home equity due to drastic fall in the market value of their homes.

The tips discussed below have been given by professionals of the banking and money lending sector.

Take help from the government- Government programs are devised for helping people. Agencies like Federal housing Administration (FHA) and Veterans Administration can help new home buyers to procure loans at nominal rates. These agencies are a big source of loans that have been designed by the government. These loans have interest rates as low as 3.5% and credit scores wouldn’t matter much here. These loans would have a slightly higher repayment package due to insurance and would have a limit to the amount that can be borrowed.

1. Be ready with documents and paperwork – Borrowers would need to submit bank statements, tax return, brokerage statements, W-2 forms etc. Try to get pre-qualification where a new home is going to be purchased.  This would help in determining the amount that can be afforded.  Be ready with all these paperwork and more. Being prepared would reduce delay.
2. Do away with variable rate loans - Loans with varying interest rates would need borrowers to pay more as the interest rises. Rates of interest are very low and loans with fixed rates would be beneficial in the long run.
3. Make up front payments to lower rates – Having enough home equity can qualify borrower for a lower interest rate. But in these difficult times home equity is a problem and hence making an up front payment would help you reap the same benefits as having home equity.
4. Raise credit score – Take care and try to increase credit score since they are very important now. A few points can change the terms of the loan to be taken.
5. Continue paying all debts - Stopping payment would affect borrower’s score. Trying to refinance or find lower rates would be a better option.
6. Use the internet – Many websites give rates and quote fees online. This is a powerful tool in finding the best possible lender with convenient terms.
7. Contain your excitement - Even with the present low rates it is better to stick with your original loan.