Applying For a Mortgage in 2014? Don’t Do It Until You Read These Tips (Part 1)

Thinking of getting a mortgage in 2014?  If so, there are a lot of changes happening.  Here are some tips on successfully navigating them and qualifying for the best mortgage available on the market:

Refresh your financial record-keeping skills. 

2014’s new rules require lenders to be especially thorough in requesting adequate documentation for borrowers’ income and ability to repay.  What this means is that the days of “no-documentation” loans and “low-documentation” loans are over.

To be prepared to face this new requirement, be sure to keep good financial records.  Collect your most recent tax returns, W-2s, bank statements, investment/savings statements, and documentation of assets that you own.  You should also be prepared to offer an explanation and documentation of any money that was deposited to these accounts, even if the money was a gift.

Lock in a lower rate before rates start to rise.

Due to changes in politics and policy, interest rates will be on the rise.  The economic stimulus money that has been used to keep rates lowered is declining, which means those rates will start to climb again.  The question isn’t “if” but “when.”  That being said, locking in a rate as soon as possible is a good idea.  If you’re getting your financial situation and credit in order to qualify, know the numbers you need for your credit score, down payment and income/debt ratio, and focus on reaching those numbers as quickly as possible.

Refinance if you can. 

If you are already a homeowner and your mortgage interest rate is above 5%, refinance now, if possible.  If you’re not sure if a refinance is a good idea considering the closing costs, make an appointment with a mortgage broker to find out if it makes financial sense for you to pursue one.

Bargain your way to a better loan.

The mortgage market is looking for homebuyers because a lot of the refinance business has dropped this year.  This means that you have the opportunity to shop around and find the best rate, as well as use some bargaining power.  Don’t forget to consider everything about the loan—not just its interest rate.  Having and weighing options is always the best approach.