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The 3 steps you must complete before getting a mortgage

Posted on Tuesday, January 27, 2015 at 12:35:27 PM

Prior to 2014, some experts predicted that residential financing rates would soar past 5 percent. That didn't happen, and instead rates dropped below 4 percent for many weeks. According to Freddie Mac, the 30-year fixed-rate mortgage was at 3.63 percent for the week ending Jan. 22, down from 3.66 percent the week before.

Overall, rates have been trending steadily lower, and this could encourage many potential buyers to get up off the sidelines and into the housing market. However, if this sounds like something you want to do, make sure you are prepared for the financial burden of a mortgage.

To help, follow these tips before applying for residential financing:

1. Check your personal finances
Your first step is to go over your personal finances. You'll need to analyze your current debt, income, expenses and all related elements. This way, you'll be able to tell if you can afford the monthly costs of a mortgage.

2. Get rid of your debt
Next, you'll need to pay off your debt. Resolve all your expenses if you have any outstanding loans, credit card bills or other items. With this complete, it will make you more attractive to lenders when you apply for a mortgage.

3. Do your research
Which loan is right for you? If you plan on staying put, a fixed rate is best. If you are thinking about moving in five or 10 years, maybe an adjustable rate is better. Do your research ahead of time to know what you want and what you can afford.

With these steps complete, you'll be ready to contact a lender. Give us a call at Home Loan Investment Bank to talk about all our residential financing options.