3 Things to Do Before Applying for a Mortgage
Jun 07, 2023
June is National Homeownership Month, and if you’re a prospective homeowner who’s been watching mortgage rate changes with bated breath, you’re not alone.
The good news? Even if you’re waiting for rates to come down, there’s plenty you can do to move your homebuying journey forward in the meantime.
1. Learn how mortgage products differ
“When it comes to buying a house, there are two options: purchase with cash or purchase with a mortgage,” says MFS VP & Credit Manager Akshay Mehandru. “But not all mortgage products are about homebuying.” MFS offers three different types of residential mortgages, each with its own benefits and uses:
- Fixed-rate mortgage: Because your interest and payments remain the same throughout the life of the loan regardless of market rate changes, fixed-rate mortgages offer stability, peace of mind, and easy budgeting.
- Refinancing loan: Put simply, refinancing means revising the terms of your mortgage loan to make them more favorable to you. It allows you to lower your interest rate, reduce your monthly payment, and ultimately put some extra money in your pocket.
- Home equity line of credit: For homeowners, this is a revolving line of credit that leverages the equity of your home to pay for things like home improvements, tuition costs, or emergency expenses. Easily access money when you need it.
2. Know your credit history and improve your score
In most cases, credit allows you to make a purchase even if you don’t have all the cash on hand, with the understanding that you’ll pay later. To issue you credit toward a purchase, a lender needs to trust that you will pay them back.
This is why lenders review your credit history and other factors like income to determine your risk of default when you apply for a mortgage. If you have a long history of making payments on time with no derogatory marks (collections, repossessions, foreclosures, etc.) you’ll qualify for more favorable rates and terms. Likewise, having derogatory items—or not having a credit history at all—can result in denial or unfavorable terms. Get tips on improving your credit score.
3. Understand that not all lenders are created equal.
Rates aren’t the only things that vary lender to lender—quality of service does too. There are several benefits to getting a mortgage with a well-established and trustworthy lender like MFS.
Our online pre-approval application process enables us to come back with fast pre-approvals in 24 to 48 hours. Additionally, we service every mortgage in house, meaning we’ll never transfer your loan to another company. You deal with us directly for the life of your loan—no confusion or worry about where your payments are going.
June 14: First Time Homebuyer Workshop
MFS offers several initiatives specifically designed for first-time homebuyers, including our First Time Homebuying Program which includes a .25% discount on your interest rate, a variety of helpful resources and tools, and regular First-Time Homebuyer Workshops.
Please join us for our next workshop June 14 at our main office at 56-18 69th St., where a panel of legal professionals, mortgage specialists, credit managers, and home inspectors will be on hand to help you understand things like your ideal loan amount, how insurance premiums affect payments, your rights and obligations, and more. Reserve your spot today.