Considering Applying For A Mortgage? The Most Important Questions To Ask
If you are interested in purchasing a home but you worry about getting approved for a mortgage, there are some things to consider. You need to make sure that your financial records are favorable and that you are financially ready to make that type of commitment.
You can start talking with different mortgage lenders before you commit to letting someone get your credit report. Every time someone pulls your credit to look at it for a loan it can bring your score down, so you should get a free report from the government to see what your score is, and not let any lender pull your credit until you have decided they are the lender you want to choose. Ask each lender about the following.
Do You Have FHA Loans?
An FHA loan is for first time home buyers, and this loan is structured to have the lowest credit and down payment requirements, and often it also has a low-interest rate. This is ideal if you are a first-time homebuyer and you can't afford to pay private mortgage insurance on the loan up front, and you don't have the best credit score.
What is the Fixed Interest Rate?
With your knowledge of your credit score the lender should be able to give you an estimate of what your interest rate will be when they get you preapproved. Make sure that it is a fixed interest rate and not a variable rate. The fixed rate will stay the same throughout your time making payments so you know what you'll owe.
The variable rate will be very low at first, but after a year or 2 years it could increase significantly, and it could become unaffordable. With the fixed rate, you can always refinance later on if you want a lower interest rate.
Cost of the Application Fee
Many lenders require an application fee to be paid if the lender is going to go through with the loan. The average cost in your area may vary, but compare the rates of different lenders because this will most likely come out of pocket.
You should start saving as soon as you're ready to start looking at houses so that you can put as much down on the loan to make the payments smaller. This will also put more equity in the home which is important if you need to refinance or take out a home equity loan later on. Ask these important questions before you sign any papers. Contact local professionals, such as those from Mortgage Master Service Corporation, for further assistance.
