Mortgage Loans in 2011

Mortgage rates are at record lows for both first time homeowners, as well as existing homeowners. What this means for you as a buyer however, is that your chances of securing a home loan this year could be better than ever if you have your ducks in a row and have done your financial homework.

So what will it take to get a mortgage in 2011? The same stuff it takes to get a mortgage in any other year, starting with your credit score. It isn't that you can't get a mortgage with a poor credit score, it is that your mortgage rate is going to make it impossible for you to afford to pay anything but your mortgage. And that is where current homeowners facing foreclosure found themselves at the time they purchased their homes, high interest rates because their credit score was too low to get the better rate. Higher monthly payments, resulting in less available every month for other expenses.

Credit score matters if you want the best mortgage rate. In spite of the common misconception that repeated inquiries into your credit score will not effect it, your score will fall with every inquiry. However, if you have multiple lenders making inquiries within a few weeks together, the hit will be counted as one and the drop will not be as severe.

This brings us to the next point, do the research for the best lender. You can shop around for mortgage rates and lenders, do it all within a set time frame, and get the information you need with a minimal decrease in your credit score.

While you're researching, make sure that you've already determined your borrowing budget. If you're looking for a home to buy, you should already have a budget that you adhere to, and have a savings plan in place as well. In other words, you are financially savvy enough to understand that your budget might very well be the most important determining factor in whether you will buy a home or not; can you afford it?

If you are in the market for a refinance loan, consider asking your lender to rewrite the terms of the new loan to play out over the life of the old one rather than restarting at the first year mark again. If you have already paid 10 years into your current mortgage and only have 20 to go, see if you can have the refinance loan spread over the same 20 years as well.

In the event that you do not have any savings, or are not in a position to put a down payment on your mortgage, consider a no-closing-cost refi, or applying for government assistance if you qualify. And if your loan is for less than $100,000 consider acting early in the year rather than later, when a government regulation could place you last on the list for lenders looking to make more money on bigger loans.

Make extra payments all through the year whenever you can, not just at the end of the year. You can reduce substantial time off the life of your mortgage this way just by making a few extra payments a year. Alternatively, if you are having trouble making your payments, or if you are behind on your mortgage payment, be sure to contact a HUD certified financial or mortgage counselor immediately for help and information, and to avoid the risk of foreclosure.

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Crowley & Cummings are real estate attorneys located in Dedham MA specializing in real estate closings, title examinations, complex title issues, purchase & sale agreements, condo conversions, and other related services. They service lenders and mortgage brokers, real estate agents, as well as buyers and sellers in Massachusetts, New England, and throughout the US. To learn more visit them online at www.CrowleyCummings.com.