How Do You Find the Perfect Home Loan?

By Michael Durr

"Mike is a total pleasure to work with! Great lender who explains everything thoroughly and gets you into a product that works well for you. Highly recommended!!" - Tyler Tomek

Are you considering buying a home and want to know how to get the best terms possible on your mortgage? While I believe you shouldn’t let less-than-perfect terms stop you from homeownership, I also think you should try and get the best mortgage possible. So, how exactly do you do that? As an experienced lender, I’ve helped countless buyers get the best deal possible on their mortgages. Here are three key items you should focus on to get the best terms possible:

1. Get your credit score as high as possible. What type of loan you can qualify for is determined by your credit score. Ideally, you should aim for a conventional mortgage since they allow you to get rid of private mortgage insurance once you reach 20% equity in your home. However, you need a credit score of at least 760 to qualify for this type of loan. To get your score as high as possible, keep your credit limit under 30% at all times and make consistent payments. Remember: Missing payments is the worst thing you can do. If your score isn’t where you want it, you might want to wait a little longer and build it up before applying for a loan.

2. Increase your debt-to-income ratio. Your debt-to-income ratio is simply your debts divided by your income. When lenders check what you can qualify for, your DTI ratio should be under 50%. It’s important to note that this ratio will include your potential mortgage, so you’ll need some room to spare when you apply. To get the best deal possible, I recommend working with your lender to create a debt repayment plan to lower your ratio as much as possible before applying.

3. Put more money down. It’s easier said than done, but putting more money down proves to your financial institution that you’re serious about buying a home. Putting more money down will also lower your principal and decrease your monthly payments. If you want the best deal possible, try saving up for the biggest down payment you can reasonably afford. Even if you can’t reach the 20% mark, a 10% down payment is a lot better than a 5% down payment, so save as much as you can if you want better terms.

As a final point, I recommend working with a mortgage broker rather than a bank. Banks are large institutions that aren’t flexible, while mortgage brokers can shop around to different lenders and find a loan that works for your situation. If you have questions about this or just want to chat, please call or email me. I’d love to hear from you!