The real estate market trends for 2015 in Detroit are showing promise. As the numbers begin to rise, it may leave you eager to jump into your next downtown investment. However, the process of shopping around for a mortgage is still a hassle, and a task real estate professional’s never look forward to.
We've put together a comprehensive list of how to help you tackle your next mortgage shopping adventure that will save you a bundle!
Decide between hybrid and fixed mortgages
How long will you be in this next Detroit home you're about to purchase? Only a few years? Go with the hybrid loan. This will allow you to get a lower interest rate than a typical 30-year mortgage. If you think you'll be staying longer, go for the fixed mortgage. This will allow you peace of mind with the ups and downs that occur within the housing market.
The larger the down payment, the more money you'll save
Save your pennies as much as possible, in order to put down the largest down payment you can. This will open doors to larger loans with lower interest rates, and smaller closing costs. It will also increase your loan to value ratio on your property.
Most loans require you to put down anywhere from 7-20%. If you find that you're not able to put down this much money, keep saving, in order also avoid purchasing mortgage insurance.
Fix your debt to income
This is the ratio that showcases how much make over how much you owe. This will definitely be a factor when looking into a mortgage, so limit your amount as much as possible. Have outstanding credit card bills? Try and make a large payment as soon as possible, in order to strengthen the ratio.
Print out your credit report
Your credit score is one of the largest determining factors of how your mortgage process will proceed. What type of rates you'll be offered and your overall approval for a mortgage are mainly based off a credit score. Print and review your score one a year (you get a free copy yearly), and scan through any discrepancies that may need to be resolved.
Don't settle for the first lender you meet
Make sure to shop around for mortgage lenders. Depending on what you're looking for out of a lender can make or break the difference in your mortgage. Are you looking for someone who is more direct? How about someone who is better at negotiation? Everything you would look for in a business partner is what you need to consider for a mortgage lender. Don't know where to start? Request mortgage quotes from lenders to see how they operate.
Gather all of your necessary documents early
Make sure that your application is thoroughly and carefully outlined. An accurate application means that your mortgage process will move along smoothly. Most mortgage loans are easy to fill out, but having the necessary documents ready for your lender will make it even easier. Not sure what documents you need? Collect your pay stubs, bank statements, tax returns, and any real estate paperwork.