Most of us think that mortgages are all about the interest rates. But, there are a various other things associated with it. Check out the top 5 mortgage questions and their answers before you shop around for a loan:
What is a mortgage prequalification, pre-approval and final loan approval?
In prequalification, the lender will check your credit report and income to determine how much you can afford. In pre-approval, the lender will verify your credit and employment details and approve your loan. In final loan approval, the property is appraised and the required documents are submitted to the lender.
What factors will lenders consider when I apply for a home loan?
The lender will check your credit report to analyze your financial situation, your debt to income ratio to know if you can successfully pay off the dues and the property to know if it has enough value to act as security for the loan.
What if I have credit problems?
Someone making payments on time will qualify for a loan easily compared to a person who has not. However, with time, the effects of the negative item on your credit report will fade away. So, if you’ve paid your dues on time in the past 2 years, you’ll be in a better position to get a loan.
How much down payment should I make while getting a mortgage?
Conventional loans would require a down payment of 20% whereas FHA loans require 3.5% down payment. If you are unable to provide a down payment, you will have to go for private mortgage insurance (PMI).
What closing costs do I need to pay? Are discount points a part of this cost?
Closing costs will include appraisal fee, credit report fee, settlement fee, attorney’s fee, title and hazard insurance policies, etc. Discount points are a part of the closing cost. If you pay these points at closing, it will help you in getting a lower interest rate.
While shopping for a home loan, keep these 5 mortgage questions in mind and choose the best mortgage that you will be able to afford.
- Contributed by MortgageFit Community