The Mortgage Maze: How And Where Do I Start?

Home buying can be fun although there are some aspects that can be more stressful than others. The mortgage process can be one of those.

 

How do I apply for a mortgage? Applying for a mortgage is simple, but you’ll need some information to complete the application.

  1. First, you’ll need to know your monthly income.
  2. Second, you’ll need to know the sum of your total monthly debt payments.
  3. Third, you’ll need to know your credit score (though if you don’t, the mortgage company will pull your credit to obtain this). Fourth, you’ll need to know how much money you can put down on your home and finally, it would be great to know how much house you can afford so you have an idea of the amount of the loan you’ll need.

 

How do I get pre-qualified for a mortgage? Getting pre-qualified is the initial step in the mortgage process. It’s generally fairly simple, and though it doesn’t involve an in-depth look at your credit score, it will give you an idea of how much home you can afford and what you may have to do to qualify for the home you want. You supply a bank or lender with your overall financial picture, including your debt, income, and assets. After evaluating this information, a lender can give you an idea of the size of the mortgage for which you qualify. Pre-qualification can be done over the phone or on the internet, and there is usually no cost involved.

 

How do I get pre-approved for a mortgage? Getting pre-approved for a mortgage is more involved. Initially, you’ll need to complete a mortgage application (and pay a mortgage application fee) and supply the mortgage lender with income, employment, asset and debt documents along with permission to pull a credit report on you and anyone else that you’ll have on the mortgage with you, such as a spouse. With this information, the lender can tell you the amount of mortgage for which you’ll be approved and the interest rate you’ll pay for the loan. Along with pre-approval, you’ll receive a conditional commitment from the lender in writing for a specific amount.

 

What is the best type of mortgage for me? With the m any different types of mortgages available finding the one that is right for you may take a little time, but the information is out there to help you make a fully informed decision. If you’re looking for security and stability in a loan and plan on staying in your home for ten years or more, then a fixed-rate mortgage m ay make the most sense. If you’d like lower payments the first few years you’re in the home with an increase in your payments after five, seven or ten years, then an adjustable rate mortgage may make the most sense. A conventional loan (one that is backed by the US Government) m ay make sense if you don’t have a large down payment. If your home qualifies for an FHA loan, this may be the perfect type of loan for you, and if you’re a veteran, you’ll want to look into the advantages of a VA loan. While you’re getting pre-approved, your lender should explain and explore these options with you

 

Once I’m approved, can anything change my stat us? One of the first things your mortgage lender will tell you once you’re pre-approved is to make sure you do not take on any additional debt and to pay all your current debt obligations on time. Any change in your debt-to-income ratio or your payment history at this point will lower your credit score, negate the conditions of your pre-approval agreement with your lender and probably ensure a higher interest rate (and thus, a lower loan amount) on your mortgage.

 

What documentation will I need for a mortgage? To apply for a mortgage, you’ll need documentation of your names and addresses of your employers for the last two years, pay stubs from the last 30 days, W-2 forms for the last two years, two years of tax returns, bank statements for the last three months, proof of pension or any other income producing assets for the last two years, child support or alimony if applicable and information on any debts such as car loans, student loans or credit cards. You’ll also need to provide the contract you’ve signed with the home builder to purchase the home, and a copy of the earnest money check you wrote to them.

 

What is the difference between pre-qualification and pre-approval? Pre-qualification is a process that should give you an idea of how much home you can afford and give you an idea of some of the things you may need to do to put yourself in a position to purchase a home. The result of a pre-qualification process is to give you the information you need to begin your new home search. Pre-approval is a more formal process that will take a deeper look at the home you want, your financial fitness and ability to repay the loan and it results in a commitment from the lending institution that indicates that they’ll fund a home loan based on the information gathered during this process provided there are no changes to the status of the borrower. Builders tend to take shoppers with a pre-approval letter from a mortgage company m re seriously than they do shoppers with a pre-qualification.

 

Are there any mortgage programs specifically designed for first-time home buyers? Often, the term first-time homebuyer is a marketing phrase that mortgage companies use to attract business from prospective borrowers. Often, these are repackaged loans with some incentive provided by the mortgage company or builder to entice the borrow to use them for the loan. However, there are some states, or even local municipalities that offer down payment assistance or slightly lower interest rates to first-time homebuyers who meet specific criteria. You should ask your mortgage lender if your state or city has any first-time homebuyer programs for which you’d qualify before you complete your mortgage application.

 

The mortgage process can sometimes take time; but, it is a crucial part of home buying and the sooner you start the process, the better chance you have of managing your wants and needs and keep them in line with your budget!

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