12 Mortgage Moves to Buy a Home

Grabbing a mortgage loan has become a challenging task in recent years. Don't expect that to change anytime soon. Lending standards remain tight, but that doesn't mean you won't be able to snag a mortgage with an attractive rate. Savvy borrowers who understand the rules and prepare in advance will improve their chances of success. These tips will help you stay on top of your game as you try to secure a mortgage.

Study your credit
Good credit is the key to snagging a mortgage in this tight lending environment. Get copies of your credit scores and credit history from the three main credit reporting bureaus. Study the reports carefully to make sure there are no errors or issues to resolve before applying.
Most lenders require a minimum credit score of 680 to comply with Fannie Mae and Freddie Mac's guidelines. Federal Housing Administration loans, which are guaranteed by the FHA, allow for lower scores, but most lenders want to stay away from scores lower than 620.

Prepare before you start
There are some basic documents every lender requests when you apply for a mortgage. Don't wait for them to ask. Have these documents ready when you walk into the lender's office: your last two pay stubs, W-2s, income tax returns and bank statements.
Save these documents and any additional ones the lender requests in an electronic format, so you can easily resend them if anything gets lost in the process.

Know how much you can afford
Don't rely on your lender to tell you how much mortgage you qualify for and then borrow the maximum amount. Plan your budget, and leave room for unexpected expenses. That's especially the case when you are buying a house. 

Shop around
Shopping around for a mortgage should go beyond comparing interest rates. Rates are important, but would-be borrowers must consider points, closing costs and different types of loans. Get estimates from three banks and three mortgage brokers before you decide which combination works for you.

Time is of the essence
Once you submit your mortgage application to the lender, the clock starts ticking. Make sure you quickly send in any documents requested during the approval process.
For buyers, a delay in closing the loan could kill the purchase and cost them their deposits. When refinancing, a delay could mean losing the interest rate the borrower originally locked in. Ask for an expected closing date, and follow up with the lender periodically until the loan closes. Keep in mind, some lenders close more quickly than others.

Mortgage approved? Your credit must stay put until closing
After the lender pulls your credit and says you've been approved, don't assume you've won the battle. Most lenders will pull your credit again before the loan closes.
It's wise to avoid any moves that may affect your credit. Don't apply for new credit cards or credit lines. Pay your bills on time. Don't close any accounts. Don't finance a new car. Stay put until closing.

Consider a refi with no closing costs
You don't always have to spend money to save money when refinancing. Many lenders offer mortgages with no closing costs. No, it's not a free ride. Lenders usually make up for those costs by charging the borrower a slightly higher interest rate. Sometimes the slight increase translates into a few extra dollars in the monthly payment, and the borrower can save thousands in closing costs.

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Smart Steps for Every New Homeowner

Turning the key in a lock that no landlord can access, reading while resting in a hammock in your own backyard and painting your dining room bright red - what could be more exciting than making the leap from renter to first-time homeowner?

Getting swept-up in all the excitement is a wonderful feeling, but some first-time homeowners lose their heads and make mistakes that can jeopardize everything they've worked so hard to earn. Don't be one of those people; take a few moments to ponder these practical concerns that will help ensure that your first home becomes the place of luxury and financial freedom you've anticipated.

1. Don't Overspend on Furniture and Remodeling

You've just handed over a large portion of your life savings for a down payment, closing costs, and moving expenses. Money is tight for most first-time homeowners - not only are their savings depleted, their monthly expenses are often higher as well, thanks to the new expenses that come with home ownership, such as water and trash bills, and extra insurance. Everyone wants to personalize a new home and upgrade what may have been temporary apartment furniture for something nicer, but don't go on a massive spending spree to improve everything all at once. Just as important as getting your first home is staying in it, and as nice as solid maple kitchen cabinets might be, they aren't worth jeopardizing your new status as a homeowner. Give yourself time to adjust to the expenses of home ownership and rebuild your savings - the cabinets will still be waiting for you when you can more comfortably afford them.

2. Don't Ignore Important Maintenance Items

One of the new expenses that accompany home ownership is making repairs. There is no landlord to call if your roof is leaking or your toilet is clogged (on the plus side, there is also no rent increase notice taped to your door on a random Friday afternoon when you were looking forward to a nice weekend). While you should exercise restraint in purchasing the non-essentials, you shouldn't neglect any problem that puts you in danger or could get worse over time, turning a relatively small problem into a much larger and costlier one.

3. Hire Qualified Contractors

Don't try to save money by making improvements and repairs yourself that you aren't qualified to make. This may seem to contradict the first point slightly, but it really doesn't. Your home is both the place where you live and an investment, and it deserves the same level of care and attention you would give to anything else you value highly. There's nothing wrong with painting the walls yourself, but if there's no wiring for an electric opener in your garage, don't cut a hole in the wall and start playing with copper. Hiring professionals to do work you don't know how to do is the best way to keep your home in top condition and avoid injuring - or even killing - yourself.

Your Monthly Maintenance Minute

Don’t let winter slip away without using the cold weather to help you detect where your home is leaking heat, giving you a chance to seal it up tight and develop a wish list for energy-saving improvements. Find and seal energy leaks. Grab a pad and pencil to note any spots that you can’t address right away. Arm yourself with a tube of caulk to fill small cracks and a spray can of insulating foam sealer for larger gaps. Tour your home feeling for cold air entering through cracks in chimneys and window and door frames, and cracks around appliance vents, electrical and plumbing fixtures and furnace ducts. Remedies might include adding weather stripping to a door frame or applying fresh caulk to window frames.

If you’ve sealed the obvious leaks and your home is still inefficient, you’ll get more detailed information from a professional energy audit. The auditor can recommend energy-saving improvements and point out those that will most improve efficiency. Check a contractor’s references thoroughly and check for complaints at the Better Business Bureau. The Energy Department advises finding a contractor who uses a calibrated blower door and who does thermographic inspections. Expect to pay roughly $300 to $500. In some cities, utility companies or government agencies do the work or help with the fees.

Clock Ticking on FHA Limits

If ever there were a Cinderella moment in real estate, it will strike this fall when the gilded, stimulus-minded mortgage limits for FHA loans return to their pre-recession, pumpkin-patch levels. As of Sept. 30th, the current mortgage loan limit of $365,000 will fall back to $274,050. That's an entire castle's worth of lost buying power. In addition, experts predict the minimum down payment (now 3.5%) is bound to rise again. So, as a prospective home buyer, take advantage of FHA's programs and historically low interest rates to purchase - at prices that rival rent payments! Doing so will help to ensure your 'glass slipper' dreams of home ownership aren't shattered. Besides, your fairy godmother would be proud.