Mortgage Advice Guide
Experts, such as lenders and brokers, are available to offer mortgage advice and guidance. It's important to ask questions when applying for a mortgage and buying a house. Being unfamiliar with home loan financing can result in a bad mortgage loan. Education is key to getting a good home loan, which consists of a home loan with a low rate and desirable terms.
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Improving Credit Score
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Increase mortgage approval chances by fixing your credit score before talking with home lenders. Mortgage lenders have strict lending guidelines, and having a bad credit history with late payments, a recent bankruptcy and high balances can jeopardize a home loan approval. Paying bills on time and paying off credit card debts can raise scores and help with the approval. Ideally, lenders want a score of 680 or higher.
Preparing for Down Payments
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The chances of getting a zero down mortgage loan are slim, because the majority of lenders do require a down payment. Seldom are homeowners required to put down the traditional 20 percent, but some lenders will ask for a minimum of 5 percent.
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Private Mortgage Insurance
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While many lenders do not adhere to the traditional 20 percent down payment requirement, putting a huge down payment on a house can build quick equity and possibly eliminate private mortgage insurance or PMI. This insurance accompanies every home loan without 20 percent equity. Annual premiums for PMI are about one half of 1 percent of the loan balance, says Bankrate. Eliminating this extra expense will reduce the monthly mortgage payment.
Mortgage Pre-approval
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Mortgages are complex, and not everyone meets the requirements for a house loan. Rather than house shop first, and then look for a home loan, talk with lenders or brokers first to see how much you can afford. Lenders and brokers will take your financial history and credit history and pre-approve you for a specific home loan amount. This eliminates guessing or estimating how much you can realistically spend on a house.
Know Your Options
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Several mortgage options are available. Ask your broker or lender questions and learn your options for financing a house. For example, you can choose a loan term between 15 and 30 years. There's the option of a fixed rate home loan with a mortgage rate that stays the same for the entire term, or an adjustable rate mortgage with rates that adjust every couple years. Discuss the advantages and disadvantages of both options.
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