Taking Out A Mortgage
A Step By Step Guide
"Low-interest rates." Have you heard that phrase over the last year? It's because it's true. Interest rates are super low, which means you can get a mortgage at a shockingly low rate.
1. CHECK YOUR CREDIT SCORE
Before you embark on the home buying process, be sure to check in with your credit score, the little three-digit number that tells credit unions & banks whether or not they should trust you to pay down your loan.
The higher your score, the lower your interest rate.
You'll usually need at least a 620 credit score to qualify.
If your credit score is a lot lower than you thought it was, check your credit report and read through line by line to make sure there are no errors.
Use a credit simulator to see if there are actions you can take to improve your score.
2. FIGURE OUT WHAT KIND OF MORTGAGE YOU WANT
- Conforming - VA
- Non-Conforming - FHA
- Conventional - USDA
3. DEFINE THE TERMS OF YOUR MORTGAGE
Fixed or adjustable-rate
- Fixed - Your interest rate stays the same throughout the life of the loan.
- Adjustable - The interest rate will change throughout the life of the loan
- 15 year - Usually costs less in the long run
- 30 year - More affordable monthly payments
4. CHECK WITH AN EXPERT
Set up a quick exploratory call with a mortgage expert so they can guide you through the process and timing of everything.
-Jean Chatzky Director of Education, Editor in Chief SavvyMoney