Shopping for a Home Loan – What Every Buyer Needs to Know

Buying a home is a difficult and sometimes intimidating process, and finding the right loan can be one of the hardest aspects. Shopping for a home loan is quite different from financing a car or other short-term purchase. After all, you will be living with the consequences of the decision you make today for the next 15 to 30 years.

Whether you are in the market for your first home or looking for a larger property for your growing family, there are some things you need to know when shopping for a loan. Here are some practical tips you can use to get the best financing for your new home.

Know Where You Stand

If you do not yet know your credit score, getting it should be your first step. Until you know your credit score, you have no way of knowing where you stand or what kind of rate you may qualify for.

Getting access to your credit report and credit score is easier than ever before. Many credit card issuers now print the score right on their statements, so the information may be closer than you think. If your credit card company does not provide that information, you can get it easily, and inexpensively, by contacting the three major credit reporting bureaus – Equifax, Experian and TransUnion.

Check the Financial Press

Even if you are not a regular reader of the Wall Street Journal or Barron’s, it is a good idea to check a recent issue. The financial press can provide a host of useful information, from the current level of interest rates to future trends.

Knowing the current state of the economy and interest rates can help you find the right financing for your new home. If interest rates are expected to rise shortly, locking in a low rate today could save you a lot of money. If rates are expected to fall or stay the same, you can afford to wait as you ferret out the best deal.

Shop Around

As with any type of financial decision, shopping around is likely to yield the best results when it comes to getting a mortgage. Expanding your search to a wide variety of financial institutions, from independent mortgage brokers and large money-center banks to local credit unions, is essential if you want to get the lowest interest rate and best terms possible.

Shopping around is important, but you can still start with your own bank. If you have a long history with the institution, you may be able to get a great rate based on your past history of financial responsibility. You can then use that mortgage rate as a benchmark, comparing it to other competing offers as you shop around.

Financing a home is not an easy process, but doing your homework and knowing how to prepare can make it simpler. The tips above can help you get the best mortgage for your money and the best deal on the home of your dreams.