Shopping for a mortgage – here’s where to start.

If you’re in the market for a car, you’ll likely spend time researching and visiting dealerships to make sure you find the car and the deal that is perfect for you. While you can’t test drive a mortgage, for a purchase of that size you should absolutely shop around! Different lending institutions can offer different rates, accept individuals with different credit scores and can approve you for different loan amounts.

We know what you’re thinking – that sounds intimidating. And it absolutely can be! But like shopping for a car, you can come into the process feeling confident with a little research and preparation. Before you start shopping for a mortgage, here are a few things you should do first:

Know your current financial situation.

To qualify for a mortgage, you often have to provide a number of financial documents. Start gathering paperwork related to your financial situation – including pay stubs, investment statements and credit card statements. Have a clear understanding of what you have in savings, how much of a “rainy day” fund you have available, and all sources of revenue your family has available. Potential lenders will likely need to see this information to make sure you can afford to pay your monthly mortgage payments.

Understand what your credit score means.

In addition to financial information, your lending institution will evaluate your credit worthiness using your credit score. Your credit score uses a number of factors – outstanding debt, regular payments on outstanding loans, the amount of time you’ve had credit – to help financial institutions judge your ability to make prompt and full payments. If you don’t know your credit score, or worry your credit score is too low, United Housing offers credit counseling to help! We can help you understand what your score means and work to raise it.

Learn about mortgage options.

There isn’t a one-size-fits-all mortgage. There are different products that financial institutions offer depending upon your life stage and financial situation. It’s important that you understand the different mortgage types and which products are (and are not) a good fit for your family. We want you to avoid getting your hopes up about a loan product (and then a future home) that is out of your financial reach. This is what we teach in United Housing’s Homebuyer Education course! We break down available mortgage options in the current market and which options are available based on your circumstance.

Research financial partners.

Your mortgage lender will be part of your life for the next 15 to 20 years, so you want the relationship to be a good one. Do research and look to partner only with stable, trustworthy institutions. And, these institutions aren’t always banks! Community Development Financial Institutions, like United Housing, sometimes have loan options that you can consider when shopping for a mortgage!