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How to Shop for a Mortgage

How to Shop for a Mortgage

For most people, a home will be the biggest purchase that you will make in your lifetime and will require obtaining a mortgage.  Shopping around for a mortgage will help you find the best financing deal. Locking in the best possible interest rate may involve some time and research, but it will pay off for the homeowner in the long run.


Get your Credit Score

Your credit score is what is going to help lenders determine if you are qualified for a loan and the interest rate that you will pay.  For most lenders, the higher the credit score you have, the better interest rate you will be able to obtain. Because of this, you should spend some time looking at your credit score and seeing if there's any way you can raise it.  If you have any unpaid bills or a credit card that you can easily pay off that's a great start.  


Consider Mortgage Types

There are two types of loans that a homeowner can obtain.  Government-backed and conventional loans. Conventional Loans makeup about 65% of all loans and are not backed by the Federal Housing Administration (FHA).  These loans are offered by private lenders like commercial banks, mortgage companies, and credit unions. Government-backed loans, on the other hand, are loans that are specifically designed for people with bad credit and stricter buying circumstances.  Government-backed loans also have less rigid borrowing requirements and are ideal for first-time homebuyers.  


Obtain Information from Several Lenders

Seeking out information from several different lenders could be a good idea when searching for a mortgage.  You might find that different lenders offer lower interest rates or different perks when you borrow with that lender.  


Assess all important costs

As a borrower, you should be prepared for extra costs around the mortgage such as application, appraisal, loan origination, underwriting, and broker fees, as well as any settlement costs. You should also consider how long you might be in your new home.  If you are only planning on living in your new home for a few years, you might have a higher monthly payment.  


When it comes time to buy a home, shopping for a mortgage will lead to getting lower interest rates. When shopping around for a mortgage, don’t forget to ask your agent about our mortgage company, West Penn Financial.