9 Golden Rules for Getting the Best Mortgage Loan You Can

What's Hot

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

Do This or Your iPhone Bill May SkyrocketSave

11 Places in the World Where You Can Afford to Retire in StyleMore

19 Moves That Will Help You Retire Early and in StyleFamily

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

50 Ways to Make a Fast $50 (or Lots More)Grow

32 of the Highest-Paid American SpeakersMake

The 35 Two-Year Colleges That Produce the Highest EarnersCollege

5 DIY Ways to Make Your Car Smell GreatCars

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

7 Household Hacks That Save You CashAround The House

5 Reasons a Roth IRA Should Be Part of Your Retirement PlanGrow

30 Awesome Things to Do in RetirementCollege

Beware These 10 Retail Sales Tricks That Get You to Spend MoreMore

9 Tips to Ensure You’ll Have Enough to RetireFamily

If you're thinking of buying real estate, read this before plunging in. These mortgage-buying tips will save you money and heartache.

Interest rates are still near historic lows — which cannot last forever. Meanwhile, as the cost of rental homes pushes into the stratosphere, in many markets it’s worth considering whether it’s time to get into the housing market instead of renting.

If you’re thinking of buying a house or refinancing your existing mortgage, read on for information that will save you money and heartache.

1. Check your credit reports

Your first move – long before you start home shopping – is to find out where you stand with mortgage lenders and how to improve your position. (Read: “This Tip Could Save You $50,000 on Your Next Mortgage.”)

Check your credit reports for problems or errors. This won’t give you your credit score, but the information in your credit reports is the basis for your score. It takes time to fix any errors so get going as soon as possible before applying for a mortgage.

A cleaned-up credit report can raise your FICO score. With a score above 760 (FICO scores range from 300 to 850), you’ll enjoy the best mortgage offers and interest rates. The lower your rate, the cheaper your house payments will be.

To see how much money a stronger credit score could save you, plug your numbers into this calculator at myFICO.com. You’ll also see the score ranges — 660-679, for example.

Suppose someone with a score between 760 and 850 gets a 30-year fixed-rate mortgage for $300,000 at 3.3 percent APR (annual percentage rate). The monthly payment will be $1,319 a month. (Interest rates change daily; watch current rates here).

Homebuyers with lower scores can’t get that great rate. With a score in the 620-639 range, you might pay about 4.9 percent. That’s a $1,596 monthly payment — $277 more each month.

2. Meet with lenders

Now you’re ready to meet with a mortgage lender or broker — or several — to ask for advice on how to boost your credit score. These early chats also prepare you for mortgage shopping, letting you see and compare lenders’ styles, knowledge and helpfulness.

Ask them what documents you’ll need to submit when you apply. Federal mortgage rules that went into effect in 2014 protect consumers better but they also make it a bit harder to get a mortgage — all a response to the subprime lending crisis. You’ll be judged on eight points:

  • Income and assets
  • Employment
  • Child support or alimony obligations
  • Credit history
  • Monthly payments on debts
  • What you can afford to pay monthly on a mortgage
  • Other mortgage costs, like home and mortgage insurance and property taxes
  • Your remaining income

For the best rates, all of your monthly payments must be less than 36 percent of your pretax monthly income, although FHA loans may accept total debt payments up to 43 percent of your income.

3. Pull your credit score

Now we’re talking about your actual credit score. As we said above, it’s different from your credit report. Even if you’re not ready to make a purchase, you’ll want to watch your score to monitor your progress improving it.

MyFICO charges $29.95 a month to provide your FICO score and credit reports. Although many competitor scores exist, the FICO (Fair Isaac Corporation) score is the one most widely used in lending and banking.

But why pay when you can get your score for free? That used to be difficult but, thanks to pressure by the federal Consumer Financial Protection Bureau, many avenues now exist to access your FICO score without paying a dime. Learn how to get your score for free here: Hallelujah! 5 Ways to Get Your FICO Score for Free.

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,719 more deals!