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DESIGN YOUR MORTGAGE FIRST, THEN FIND A HOUSE THAT FITS

Most home buyers get a mortgage as the last step in the process. Smart ones do it first.

Here are four steps to getting the one that's best for you:1. Identify your comfort zone. Decide how large you want your monthly payment to be before you expose your finances to anyone earning a commission.

Lenders will want a cushion of at least two months' worth of mortgage payments after you close. Look over the past year's worth of income and expenses before you make your decision.

Although loan officers will happily give you the maximum loan for which you qualify, their qualifying ratios don't include monthly obligations that you might not dream of cutting out, such as day-care or tuition bills.

If you make at least a 20 percent down payment, lenders will probably allow your mortgage to equal 28 percent of gross income for housing expenses and 36 percent for total debts.

2. Check your credit. TRW (800-392-1122) will send you one free copy of your credit report per year. Equifax (800-685-1111) and Trans Union Corp. (312-408-1050) both charge up to $8 for a copy of your report, unless you've been denied credit in the past 60 days.

By getting these reports now, you'll have time to fix mistakes or prepare explanations for any blemishes. Also, close out unused credit cards and lines of credit. Lenders get skittish about lending to people who have a lot of available credit.

3. Shop for a lender by comparing reputations for customer service and low rates. Ask friends for recommendations.

You can speed your loan shopping by getting a Homebuyer's Mortgage Kit from HSH Associates (800-873-2837). For $20, HSH will send you a book on mortgages and a review of about 60 lenders in your area.

A good loan officer will explain the hodgepodge of loans, points vs. interest rate, and the options for making a low down payment.

Try the national mortgage lenders too. Countrywide Home Loans (800-570-9888) will preapprove your application by phone and lock in your rate for 30 days, no charge.

4. Get a preapproval letter. This means the lender will give you a mortgage up to a specific amount, as long as the home appraisal justifies the price. If you plan to spend less than you can afford, ask the lender to write your letter to conform to that amount. That way, no one knows how much you can really afford.