Tips to Get the Best Mortgage Deal

You can get an attractive mortgage deal if you know where to look. Take your time to search for the best mortgage deal, and you won't regret it. Since mortgages involve large amounts of money, and most fees come in percentages, even a small difference can save you a lot. Below are some practical tips towards getting a great mortgage.

Improve Your Credit Score

Your credit score plays a big role in your mortgage rates. A good credit score reassures the lender that you are financially responsible. You can boost your credit score when you:

• Identify and clear errors in your credit history. For example, you should correct paid bills that erroneously show up as unpaid.
• Don't wait until the end of the month to clear your credit balance. Make multiple payments, at least twice a month, to lower your running balance.
• Increase your credit limit — the increase will lower your credit utilization rate if you maintain or decrease your running balance.

Most of these things don't take long to accomplish. That means you can increase your credit limit within a short amount of time.

Shop Around

The financial market has different categories for mortgage lenders. Don't just compare rates for lenders within the same category. Scour the industry for all types of lenders and compare their rates. Examples of categories of lenders include:

• Credit unions that lend to members only (some have easy joining terms)
• Mutual savings banks that focus on local markets
• Correspondent lenders that channel their loans through smaller lenders
• Mortgage bankers that work for specific financial institutions

Don't just compare interest rates. Include related costs, such as:

• Loan application fees
• Attorney fees
• Mortgage insurance premiums
• Credit report fees

Ideally, you should compare offers from all the lenders that could potentially loan you money. Use a mortgage broker to help you shop thoroughly.

Make a Large Deposit

If you have some cash lying around, then increase your purchase deposit to reduce your loan. For example, you shouldn't make the traditional 20 percent deposit if you can afford twice that. Make a 40 percent deposit, and the lender will reward you with attractive rates. The reward is possible because the big deposit lowers your lender's risk in the transaction.

Buy a Conventional Property

Unusual or unique properties don't attract favorable mortgages. Lenders prefer common or standard properties. Unusual properties carry unknown risks, are difficult to appraise accurately, and are often difficult to resell. Examples of unique properties include:

• Houseboats
• Houses built with nonconventional materials
• Converter houses

Get a regular house, and lenders will be happy to deal with you.

Provide Evidence for All Income Sources

Many lenders are open to negotiation on mortgage rates. However, to get a favorable rate, you have to prove to the lender that you deserve it. One way is to prove to the seller that you have the financial strength to repay your loan. You can do this by providing evidence of all income sources, including benefits and bonuses.

Choose the Right Mortgage

Rates also vary by type of mortgage. Common types of mortgage include:

• Conventional mortgages with fixed monthly payments
• Adjustable-rate mortgages that change with the economy
• Jumbo mortgages that the Federal Government doesn't guarantee

All these mortgages have different fees, pros, and cons. Understand the mortgages on offer and choose the best for your circumstances. For example, conventional mortgages usually attract better rates than jumbo mortgages.

Many people don't know where or how to shop for a mortgage. You can use the above tips to get a good mortgage, along with using an experienced mortgage broker. Cornerstone Residential Mortgage is an experienced and independent mortgage broker who can help you find a good mortage. Contact us today to begin the matchmaking process.