By David Maillie

We hear every day how important it is to own real estate.  What we don’t hear is how to make sure we get the best rate possible and save our selves thousands and thousands of dollars over the term of our mortgage.  Not everyone is blessed with the best credit and a huge down payment.  So, how does one basically get the best deal on their mortgage or refinance?

1) Find out your credit score on all three credit bureaus.  Don’t ever let a loan officer tell you what your credit is.  They are schooled in finding ways to make extra money off of you.  The better educated you are, the harder it will be for the loan officer to pull a fast one on you.  If you do have some issues, clean them up first.  It isn’t hard to get some dings off your credit and this will save you a lot. 

2) Get all your documentation together.  This may sound trivial, but you wouldn’t believe the number of people that don’t do this well, and pay steeply with higher rates and points as a result.  You should, as a habit, keep a file of your tax returns, assets (bank account statements, mortgage payment receipts (if you have a current mortgage), business license (if you are self employed), etc… The better you can document your income, assets, and employment, the higher your chances are for getting lowest interest rates.  Yes, there are such loans as SIVA (Stated Income and Verified Asset, VISA (Verified Income and Stated Asset, and No Doc, but you will pay higher for these and some may require additional points, money down, and additional or more strict requirements (like minimal credit scores to qualify). Be sure to ask your lending institution as to the requirements as each is different.

3) If you do not currently own a house, get pre-approved before making offers.  Real estate agents are in the business of selling and will place an offer faster than you can blink an eye.  Remember, its your earnest money you are putting down (usually $1,000) and if you don’t qualify or can’t close in time you can lose it.  Just like with credit card offers, pre qualified means absolutely nothing.  On a high demand real estate listing most sellers won’t take an offer if you aren’t pre approved.  In many cases, they will not negotiate favorably with you without a letter of approval from your bank or lending institution.  Carry your preapproval with you when you house shop and watch what hurdles homeowners will go through for you.
 
4) Do not lie and be upfront about what you can and cannot document.  Don’t waste the loan officers time and yours with assets or income that you cannot document.  If you lie, they will catch you when they examine your loan prior to funding and you won’t be able to close.  Also be wary of lenders that promise things you shouldn’t be able to qualify for.  Shop around – you should be getting similar numbers for your qualifications.  If a offer is too low, or too good to be true, then it probably is.  Don’t be afraid to use internet lenders – American Home Mortgage is a great company with a great reputation for straightforward business practices and lower cost mortgage and refinance loans.  There are still quite a few mortgage scams out there.  Be sure to look up your mortgage company with consumer reporting agencies just to make sure.  It is better to be safe than sorry. 
 
There you have it – how to qualify for the best terms and save big on a mortgage or refinance.