Boston Area Mortgage Mistakes to Avoid

There are some expensive Boston area mortgage mistakes you need to avoid at all costs. Scoring the best deal on a mortgage or refinancing involves shopping around. Yet 77 percent of borrowers applied for a loan with a single lender instead of checking out several to compare costs.

A recent study by the Consumer Financial Protection Bureau indicated that people may actually put more time and effort into shopping for smaller products such as appliances and televisions than they do in shopping for the right Boston area mortgage. On a $250,000 30-year fixed rate mortgage, that could cost you tens of thousands of dollars. Following these steps will help you get the best deal on your Boston area mortgage.

Some Boston area mortgage mistakes are more costly than others.

Tips for Getting the Best Boston Area Mortgage

Get Your Credit Score – To get the most favorable rate on a loan, you need to have a credit score of at least 740, according to Bankrate.com. Recently, if your score was 740 and you applied for a $300,000 30-year fixed mortgage, you could qualify for a 3.75 percent interest rate. If your score was below 680, the best rate was 4.25 percent for the same loan, which would cost you $31,130 more over the life of the loan.

Finding a free FICO score has become easier. About a dozen lenders now provide it to customers, although you may have to have a particular kind of account. If you don’t do business with a company that offers free scores, you can pay $20 for a FICO score and one credit report at myfico.com.

Make sure you get your credit score at least 6 months before you plan to shop for your Boston area mortgage. That will give you some time to fix any errors and time to boost your score if necessary.

Determine the Type of Mortgage That’s Best for You – Determine how much you want to borrow, which type of Boston area mortgage you want, and how long a term you need so you can compare different lenders’ products.

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Most borrowers go with a fixed-rate mortgage, usually for a 30-year term, in order to spread out the cost of their home purchase over time while making predictable fixed payments each month. But also consider an adjustable-rate mortgage. If you’re going to be in your home for a short period of time, the ARM may make more sense, and it’s almost always lower than a fixed rate loan to begin with.

Many first-time homebuyers can qualify for Federal Housing Administration (FHA) loans. They usually have less rigid borrowing requirements, low down payments, and more flexible income requirements.

Compare Several Boston area Mortgage Options – Compare the deals you can get from a mix of large national banks, online banks, local regional banks, credit unions, mortgage brokers, and mortgage companies. Interest rates can fluctuate daily, so try to shop on the same day or within a few days, if possible.

After you have found the best offer, try to negotiate even better terms. Ask the lenders whether they will waive or reduce any of the fees they are charging or offer you an even lower interest rate (or fewer points). You are unlikely to get fees waived from third parties, like those for a title search, government processing fees, and appraiser fees. But you may be able to cut the lender’s fees, like its underwriting, document processing, and document preparation costs.

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