Mortgages

A comprehensive home mortgage guide for beginners

Pre-Qualifying for a Mortgage

You may have heard about pre-qualifying for a mortgage from friends or even from the television. If you are just starting to look at homes for sale, you may want to get pre-qualified. Not only does this make realtors and their buyers take you more seriously, it can expedite the process so that when you do find that special home you can make it yours in very little time. Pre-qualifying means that you have gone to a lender before you find a home and you ask them to qualify you for a home mortgage loan. You may be asked to give a general price range of the homes that you will be looking at, or your income will limit you to a certain price range. If you are pre-qualified, it means that based on all the information provided ahead of time, you would qualify for a home mortgage loan that meets all the lender’s requirements.

Understanding Mortgage Loans

While pre-qualifying is generally a good idea, you may not want to rush out and apply for the first mortgage loan that you find. Instead, you’ll want to understand the types of loans and financing options that are available. First, there are 100% mortgage loans, with a lot of hype around these loans wherever you go these days. These loans mean that you do not have to make a down payment to get into the house. You usually have to have fairly good credit and a stable income to get these mortgages. Many people believe that a 100% mortgage loan means that there will be nothing due up front, but you will probably still be liable for closing costs, inspections, and realtor fees, which can total thousands of dollars or more, depending on the price of the home that you want to buy.

In addition to the 100% loans, you can find lenders that will offer to lend 97%, 95%, 90%, 85%, and other varying amounts. What the lender will agree to lend may depend on the house and will definitely depend on what sort of credit score that you have. The higher your credit score, the more likely you will be offered a 100% loan; the lower your credit score the less help you will get with the home mortgage loan. The reason for this is that the lender wants to see that you are serious about the home and wants you to be just as invested, or more so, than they are.

If you have a hard time coming up with the percentage of the sales price that you need, you may want to ask family members for help, or as an alternative, you could get someone with better credit to co-sign the loan for you. This means that the person who signs on the loan with you will also be responsible for the debt to ensure that the monthly payments are made.

Making Your Mortgage Happen

When you find a home that you would like to buy, it’s time to make it happen. Because you are pre-qualified, the process will be a lot faster and you will find that your lender will probably be ready to close on your loan in about a week. The closing is when the buyer and seller meet and the house is transferred from their ownership to you and your lender. The meeting is usually very brief and consists of the signing of papers, delivering funds due for closing costs, and your portion of the sale price of the home, if you do not have a 100% home mortgage loan. When you leave, you will likely have keys to your new home, and you will be the proud new owner of a mortgage payment!

What Affects Your Monthly Mortgage Payment

Many people use mortgage calculators and end up with mortgages that are much more costly. There are some things that will influence your monthly mortgage payment, so you should plan accordingly. First, the interest rate of mortgages will determine how much you are paying in interest each month. Next, you will need to consider how much you will have to pay in school and property taxes, because this will likely be a part of your monthly payment. Next, insurance and mortgage protection insurance will affect the overall price, as well.

Your first mortgage experience will likely be a bit of a whirlwind, but it is important that you ask questions and get the answers you need. Don’t settle for just anything, and if you are in doubt, seek the advice of another professional. You can seek information about mortgages from realtors and loan officers so that you can realize the dream of being a homeowner.