Documenting the Coming Singularity

Thursday, December 21, 2006

Tips for Finding a Good Mortgage

One of my many hats is that of a Realtor, so I know a bit about mortgages. Even though the market has slowed considerably, we are in a buyers' market, when inventory is high and nice homes have been sitting unsold for months. So if you are considering your first home purchase, here are a few tips.

1. Secure your financing before you start seriously looking. It is better to look within your price range than to fall in love with homes that are out of your reach. In addition to this, sellers will know that you are a serious buyer if you already have your financing lined up. This fact will give you even more power in negotiations.

2. Figure out how much you can realisitically pull together as a down payment, and how much you will have available for your closing costs (although you may be able to have the seller pay your closing costs for you).

3. Do a little reasearch on current mortgage rates so you have an idea what a broker should be able to find you. Visit Bloomberg to get current information.

4. Research your credit report. If there are problems, set about trying to rectify them. (Don't buy into the scams that tell you they will clean up your report for you.) You can get a free report from the 3 consumer credit reporting companies once a year. Visit to get yours. You can get a better rate with a better score, so it may be wise to take a few months to clear up any issues. Otherwise, it's helpful to know your score when shopping for mortgages.

5. Find a broker you can trust (recommended by a friend perhaps). Many brokers will give you a beautiful good-faith estimate that will be very different from your actual closing numbers. When you get a good-faith estimate, go get another one from a different broker so you can compare them. If you are using a Realtor you trust, they may have a mortgage broker they trust.

6. Play with the numbers yourself to see what your payments would be at different rates. Keep in mind that taxes and insurance will have to be added in. Your Realtor or mortgage broker should be able to give you an estimate of these amounts. Visit Frog Rate to play with the numbers.

7. Download my monthly real estate newsletter here.

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