If you’re considering buying a house in the next few years, it may seem like the process is overwhelming. Having recently bought a house, we know it’s completely doable and there are some thing you can do to increase your chances of getting a great deal on a mortgage.

Aim for a Sizable Down Payment

The days of getting a house for no money down are gone. If you want a competitive rate for your future house, show your lender that you’re serious with a big down payment. Can you put down 20% (or more) for the house? If not, what’s the most you can put down?

Having a larger down payment, you’re probably aware means you’ll have a smaller mortgage payment. That’s going be a big help for your monthly cash flow, which I’ll discuss in a moment.

Besides making your down payment, you should still have a buffer for your emergencies. Don’t completely drain your savings account. You might think this is overkill, but if you buy a house, please know that you’re not suddenly immune to layoffs.

Have an Enviable Cash Flow

You need to prepare yourself for having a mortgage by having a solid history of positive cash flow. Your lending will look over your finances with a fine toothed comb. They will want to know if you’re able to pay this mortgage. If you can keep your total housing costs (not just mortgage) under 30%, you’ll look more promising to lenders.

My recent experience has been that banks aren’t as conservative as you think. It’s best to run your own numbers and make sure you’re comfortable with the new mortgage payments and other home owner costs. We looked at homes $50,000-$70000 less than what the bank thought we could afford.

When you step up and show that you’re in control of your cash flow,you’re giving yourself a bit of leverage. You can shop around to find the best deal.

Hunt for Your Mortgage

Now you have a great down payment and you’ve optimized your cash flow and you’re ready to go house hunting. There are several sources for getting a loan and not all of them are equal. Be aware and ask questions on any fees associated with getting a mortgage through them.

  • Commercial Banks
  • Credit Unions
  • Mortgage Brokers
  • Online Lenders

Comparing your options is a great way for you to find the lowest interest rate and fees.

Your Thoughts on Getting a Mortgage

If you’re on the hunt for a house, what steps have you’ve done to prepare? If you bought a house, how did you get a great deal on your mortgage?