So, you want to buy a house but don’t know where to begin? Maybe you’ve heard of a mortgage loan before, but have no idea what it entails or how to get one. If this sounds like you, you’re not alone. Almost everyone who buys a home for the first time has many questions and is clueless about the process.
To assist in your search, here’s a crash course in the basics of mortgage that answers the most common questions to help you feel more confident about the process and what it involves:
Q: What is a mortgage loan?
A: A mortgage is a loan used to finance the purchase of your home. It’s essentially a contract in which a borrower’s property is pledged as security for a loan that is repaid on an installment basis. There are many different types of mortgage loans available, so it’s important to talk to a mortgage advisor who can help you find the right loan program for your specific financial situation.
Q: How do mortgage rates work?
A: Mortgage rates are important and complex. Your rate, along with many other factors, determines your monthly payment cost. Things like inflation, government bonds and state of the economy also contribute to the rise and fall of mortgage rates.
Q: How do I qualify for a mortgage?
A: First, you will need to apply with a lender who will gather all necessary information about your income & debts to determine how much you can afford for a home and what you qualify for.
Q: What is the first step in the process?
A: The first step in the purchase process involves working with a loan advisor to apply and be pre-approved. This means that your loan advisor will need to collect documentation like bank statements and W2s to verify your income and determine your ability to repay the loan. It’s important to keep in mind that there are no rules carved in stone for this process, and that each applicant is handled on a case-by-case basis. This means that even if you come up a little short in one area, your stronger point could make up for the weak one, so don’t hesitate to apply.
Q: Why do I need to get preapproved?
A: Getting a pre-approval from a trusted lender is a powerful tool for homebuyers for many reasons, and is recommended before you even begin home shopping. This way you know your budget and gain peace of mind in the process. Plus, you can get ahead of your competition and increase your buying power to expedite your closing. Click this link to apply to get your free pre-approval with Inlanta today.
Q: What credit score do I need?
A: Minimum credit score needed depends on the type of loan you qualify for. Certain loan programs accept FICO scores as low as 581. Contact your loan advisor directly for more on credit requirements and what goes into determining creditworthiness.
Q: How long does the mortgage process take?
A: The national average for the mortgage process falls around 40 days, however, certain factors can make the process move faster than average and help you close sooner on your home.
Q: How much do I need for a down payment?
A: You may have heard the myth that you need 20% down to purchase a home. In reality, the down payment amount needed to buy a home will depend on multiple factors such as loan program type, credit score, home price/loan amount and more. Certain loan programs, such as VA loans, offer the benefit of low or no down payment options, and others like FHA loans offer as low as a 3.5% down payment.
Understanding the loan process and knowing the mortgage basics will increase your confidence, making the process less complicated overall to purchase a home. For more on home buying basics, contact your local Inlanta Mortgage loan expert today!