Do's And Dont's Of Offshore Mortgages
Things TO DO and NOT to do before obtaining a mortgage.
Everybody comes into the real estate market with a different
perspective and level of experience. The fact that online
mortgage applications, new loan products and rising interest
rates are competing for attention these days makes it all the
more difficult to give foolproof advice. But some general rules
apply to pretty much anybody when it comes to getting the
money to buy a home. So here are some of the do's and
don'ts that buyers will want to consider.
Five do's:
1. Make loan and other debt payments on time, especially
over the months leading up to the filing of your mortgage
application. It sounds simple, but every 30-, 60- or 90-day
delinquency on a loan or credit card is going to reduce the
credit score the lender ends up considering as part of the
loan file. That score, in turn, will determine how good a loan
you get -- if you get one at all.
2. If something has to be missed, miss the credit card
payment first, followed by the payment on any installment
loan you might have and finally, the payment for an existing
mortgage. That's because credit scoring systems look at the
performance of similar loans first when deciding what type of
score to assign.
3. Consider paying off more debt and putting down a smaller
amount at closing. The move leaves borrowers with larger
mortgages, but it will allow them to replace non tax-
deductible, high-interest rate debt with lower-rate mortgage
debt that features deductible interest.
4. Get the mortgage first if multiple financial obligations are
going to pop up in the near future. Numerous credit inquiries,
such as new applications for credit cards, can hurt a
borrower's credit score, especially if they're filed in the
months prior to the home loan review process.
5. Increase the size of the down payment you're able to make
by saving as much as possible, as often as possible. Don't
put the savings into something volatile, such as an individual
stock. But evaluate money market or other accounts that offer
reasonable rates of return, automatic payroll deductions or
other financial incentives to save.
Five don'ts:
1. First off, don't make any big purchases over the next
couple of months. Besides the obvious fact that it makes
less money available for the down payment, it might require
you to get yet another loan. A significant debt such as a
$15,000 auto loan will look bad to the mortgage lender's
credit scoring systems. Plus, the human underwriter won't
want to see you adding a couple of hundred dollars per
month to your monthly expenses.
2. Don't try shooting for that six-bedroom house in the
Hamptons if it's going to be too much of a stretch in your
current budget. Lenders consider what's known in the
industry as "payment shock" when approving loans.
Somebody who goes from a relatively small monthly housing
payment to a huge one either won't qualify for a mortgage or
will end up having to cover too much loan with too little
money.
3. Don't just get pre-qualified for a mortgage, get pre-
approved. To get pre-qualified, a borrower need only submit
credit, income and debt information voluntarily to a mortgage
broker or lender. That means the resulting estimate of the
maximum mortgage and home that's affordable is exactly
that -- an estimate.
4. Don't forget what kind of money personality you have when
getting a mortgage. By taking out a 30-year fixed rate loan
rather than a 15-year mortgage and investing the money
saved on monthly payments, you might earn a higher return
on your money in the long run.
5. Last but not least, don't forget that homeownership brings
with it many burdens. The cost of defaulting on a loan is
much greater than the penalty of missing a rent payment.
by: Diego Zhang
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