For American homeowners, mortgage repayments are likely to be the biggest monthly outgoing. So for those of us having to tighten our belts and try and reduce what we spend each month, any saving on a mortgage could result in a significant amount of saving.
If your mortgage loan is due up for renewal in the near future, or if you’re thinking about moving property, you’re actually in luck; rates for locking in to a 30-year fixed loan are currently at a record low. The US housing market is still experiencing a moderate month-by-month rise in house prices, but this is being kept in check by fluctuating demand. For those already on the housing ladder, this does present opportunities to up-size with a good deal. Despite the current market uncertainty, home-ownership aspirations in the US remain strong, with a recent survey revealing that 84 per cent of adults under the age of 35 aim to own real estate in future.
However, to make the most of what’s on offer, there are certain pitfalls than need to be avoided:
Check your credit score
Before you do anything, check your credit score. There may be something small and insignificant lurking in there – a forgotten credit payment on an old card perhaps – that could hamper your chances of getting a good mortgage deal. After you get knocked back once, the situation can easily escalate.
Shopping around may seem obvious, but some people – especially first-time buyers – are so relieved to be accepted for a mortgage that they stop looking. Taking your time and putting the effort in to look for the best available deals really pays off in the long run. So use a broker to get an idea of what’s available, but don’t be afraid of going direct to a mortgage lender’s website - by cutting out the middleman you might well get an even better deal.
Sit on your assets
To get the best mortgage rates, the lender wants to know for sure that you can pay the money back. This involves showing them what assets you have, not just at that point in time, but in the recent past as well. Transferring money to a bank account to show a healthy balance days before the lender checks will not work – the paper trail will expose you. You need to sit on these assets for a few months before you make these applications.
Photo by Diana Parkhouse