Getting the Right Mortgage

• 1
  Make sure the information on your credit report is correct.magnifier with a credit card. image by Petr Gnuskin from Fotolia.com
  
  Check your credit score. This score is a number between 300 and 850 and is what banks use to assess their probable risk in lending to you. The higher your credit score, the better risk you are and the lower the interest rate they will offer you. If your credit score is below 700, you should request your credit reports and review them for accuracy. Every consumer is entitled to receive a copy of all three of his credit reports at no cost once a year; go to AnnualCreditReport.com to get yours. If you see any items that are either incorrect or older than seven years, you can contact the credit bureaus and file a dispute. By law, credit bureaus are required to remove any inaccurate or outdated information, but they will only do so if you bring it to their attention.
  
  
• 2). Shop around for the best mortgage rate. There are two ways to go about this: on your own or using a mortgage broker. If you decide to do it yourself, you can go online, where there are numerous websites that allow you to compare rates. Here are a few of the top sites: Quicken Loans, Google and Bankrate.com. Remember, the rates you see online or receive from a banker or broker over the phone may not be the final interest rate you end up paying. You will not get a real rate until the lender has pulled your credit report and processed your application. Even then, rates fluctuate daily, and your final interest rate will not be set until you have gotten a written "lock-in" from the lender.
  
  Mortgage brokers help you do the shopping to find the best possible rate, given your credit score. Sometimes, when you shop for rates, it is not clear whether the organization is a lender or a broker, so you may end up inadvertently using a broker and paying the broker's fee in addition to the other costs of the loan. If you are going to use a mortgage broker, your best bet is to hire one yourself because unless you have contracted the broker, he is not obligated to get you the best rate.
  
  Although the interest rate is the main cost associated with a mortgage, there are other costs as well. These may include broker's fees, points, loan origination or underwriting fees, and transaction, settlement and closing costs. Many of these fees will be due at the time of the closing.
  
  
• 3). Fill out the lender's application and supply the requested documents. These usually include tax returns for the past two years, pay stubs, the signed sales contract for the property, Social Security numbers, W-2 forms, and several month's worth of bank statements and investment account statements. Once you submit the application and documentation, it normally takes anywhere from a couple of days to four weeks to get the final approval from the lender.