How to Get a First Mortgage During a Recession

During a recession, the growth of the economy slows down. Money becomes tight, consumers spend less, and often the price of houses hits an all-time low. In addition, during periods of recession, the Federal Government lowers the interest rate to try to spur the economy. For these reasons, a period of recession is a great time to apply for a mortgage and buy your first home.

Difficulty: Easy

Instructions

1. Contact several mortgage lenders for rate quotes. When getting quotes, be sure to also get a list of all fees the lender charges in connection with the loan. Compare both rates and fees before choosing your mortgage lender.

2. Choose a fixed-rate first mortgage loan. Sometimes it is tempting to choose a variable rate mortgage, because the rate offered is lower than the fixed rate. In a recession, it is never a good idea to choose a variable rate. When the recession ends, interest rates rise. With a fixed rate mortgage, you keep your low rate for the entire life of the loan.

3. Solicit mortgage rate quotes from financial institutions that you already do business with. Sometimes you can get the best rates from a bank that knows you and your financial profile.

4. Check with the Better Business Bureau to make sure the mortgage lender is reputable, if it is a company that you don't have a history with.

5. Get a letter of pre-qualification from the mortgage lender after you decide which lender to use. You need to have this letter before approaching a realtor for help finding your first home.

6. Buy more house for your money by purchasing your first home during a recession. When the economy recovers, the cost of homes increases and you gain equity in your home quickly.