So you want to buy a house? Unless you have the money to buy ahouse that you will need to get a mortgage. Today there are many different types of loans and loan programs. There are also a large number of banks, mortgage brokers and lenders.
Before applying for a mortgage there are a few steps to follow.
Determine how much mortgage you can afford. You do not want a house that you can not afford, which means you do want a mortgage that fits your current budget. The first thing to do is look at your income and expenses. Calculate how much you can comfortably afford each month. Remember, you not only have to pay the mortgage; you also have to pay insurance, taxes and other living expenses. Use the Mortgage Calculator to determine how much you can afford each month.
Get the perfect loan. When shopping for a loan you can go to a direct lender, a mortgage bank, or you can go to a mortgage broker. Banks lend money directly, while mortgage brokers can shop around to find the best deal for you. When calculating the cost of borrowing, ensure that you include all the expenses of broker fees, application fees, the credit report, appraisals, loan term and more.
Apply for a loan. Be prepared with information about your income, your job, your assets and liabilities. Prepare your bank statements, pay stubs, tax returns, leases and any investment earnings reports, have them ready. Before completing the loan application make sure you know what’s included in your credit report and your FICO score, there is no doubt that lenders will look at both.
The best way to get a mortgage;
A lender approval of an application for a mortgage loan can provide a greater sense of accomplishment. Unfortunately, getting a home loan can be difficult if not prepared for the process. Lenders take into account factors like income and credit. Knowing what lenders look for when considering your application can help you get approved with some comfort.
• Know your credit history and check your score. Check your credit report by requesting a free copy of credit report annually. Check the report for information, such as collection accounts and late payments that can disqualify a mortgage loan. Get your credit score to evaluate your qualifications Myfico.com.
• Show the sources of income. Make copies of your most recent tax returns or pay stubs to show the mortgage lenders. This information helps lenders determine affordability.
• Improve you credit, if you have a low score before applying for a mortgage. Increase your credit score to 680 before talking to mortgage lenders. Establish a track record of timely payments to prove that you are able to manage credit wisely. Dispute errors on your credit report and quickly make contacts with your creditors to discuss ways to correct them. This method can help improve your credit report within 72 hours and quickly improves your score.
• Reduce your debt to qualify for a mortgage. Too much debt can stop you from getting a mortgage or reduce the amount of loanyou can borrow. Pay off credit cards debt and stop charging new debt.
• Look around and compare mortgage options. Minimum credit score varies depending on the type of loan. Ask an agent to explore all your mortgage options. Applying for free mortgage quotes. Rates allow comparisons between lenders. It is necessary to evaluate different loan terms, interest rates, monthly payments and closing costs.
• Start saving early for a down payment on a mortgage loan. There is flexibility in regard to mortgage loans. Plan to spend between 5 and 20 percent of your payment.
Mortgage debt can not exceed 28 percent of your income, and total debt (including mortgage payment) can not exceed 36 percent of your income to qualify for a mor
Buying a home is a major and more expensive purchase than any one that you will do in your life!
You will spend much time researching and finding the perfect home. Decisions may include: the new home located in the suburbs or downtown? Is it near schools? Is it close to shopping and highways? Wheher you have a large kitchen or a large patio complete with a pool and a large cedar deck for Sunday BBQ?
But yet when it comes to finding the best deal for a mortgage, most often just take what is offered to you by lending institutions, rather than ensure the best possible mortgage for your particular situation.
So when you consider that the average homeowner will pay more in interest over the life of his mortgage than the home originally cost, which is vital to do your due diligence and research the possibility of getting a mortgage before buying a home. This step can save you thousands of dollars in interest payments over a period of 20, 25 or 30 years of the mortgage.
Fortunately, research for the best mortgage loan and payment options available today can be found on the Internet. Making this painful process much more efficient and relaxing for you.
All mortgages are not equal
Mortgage loans come in several different ways. You as a prospective homeowner should be aware of them, for you to determine what type of mortgage is best for you based on your particular circumstances.
Mortgages fall into one of the following categories
Mortgage lenders will have different variations of these basic categories and can present them to you differently, but if you’ve done your homework, you will be able to determine and choose the right package just for you based on your age, income, and your credit situation.
What is a Fixed Rate Mortgage;
Fixed-rate mortgages are loans with a fixed interest rate that stays the same throughout the term of the mortgage. Approximately 75% of mortgages are of this type. This is a “fixed rate mortgage” loan often offers the best bid / offer rates for first time home buyers.
What are adjustable rate mortgages and adjustable rate mortgages
An adjustable-rate mortgage is a mortgage where the interest rate is adjusted back and forth or relects the fluctuating rates of Treasury bonds or certificates of deposit. These rates vary according to the weekly treasurey rates.
Adjustable rate mortgages or variable rate mortgages can be an attractive option because rates are lower than fixed rate mortgages. They are an excellent option for borrowers who are aware of the exchange rate and are ready to “lock” their mortgage before interest rates begin to rise. If you have knowledge or keep ongoing monitoring of money markets, this type of mortgage may be the best to deal with.
What is a balloon mortgage;
A balloon mortgage is when the monthly payments are not intended to pay the entire loan. Thus, the final payment is a payment of a large sum of the remaining capital. Balloon mortgages are the only partially amortized and requiring a lump sum repayment at maturity.
Balloon mortgages are very popular in the U.S. for homeowners who are not planning to stay in their newly purchased home for over 5 years. This is because the balloon mortgage interest rate is lower than a “fixed rate mortgage.” But if you decide to stay home longer than a period of 5 to 7 years, then you have to get a new mortgage to pay off the existing mortgage.
1.) Interest Only
An “interest only” payment method can be combined with any type of mortgage you choose. The interest payment periods almost are limited not for the term of the life of the loan, so be ready to place your payments including both principal and interest once the “interest only” period ends.
2.) Principal and interest
your monthly payments will be divided into: a payment of interest and amortization of capital. At the beginning of the mortgage loan, most of the monthly p
ayments are allocated to interest but over time the balance will increase gradually towards the principal, allowing you to pay more capital.