Mortgages are complicated, but homebuyers need to know about their options. That’s why it’s a good idea to get those pressing Mortgage Questions Answered before looking for a lender. Read on to find answers to some of the most frequently asked questions about home mortgages.
What Factors Influence Loan Qualification?
Several factors influence whether a borrower will qualify for a mortgage. They include income, assets, outstanding debt, where the borrower works, and how much he or she intends to use as a down payment. These same factors can influence interest rates.
How Much Should Home Buyers Spend?
A new home is supposed to be an asset, not a liability. Lenders often offer borrowers more money than they need, which can make it seem like it’s a good idea to purchase a more expensive house, but that’s not necessarily the case. Experts recommend keeping monthly payments to no more than a quarter of borrowers’ take-home pay, as this avoids other potential hardships.
How Much Is Required for a Down Payment?
The short answer is that buyers should put as much money down as they can afford to spend without placing themselves in a potentially untenable position financially. Having at least 20% of the home’s value as a down payment avoids the need for PMI, which is a type of insurance that must be paid every month. A solid down payment also means the monthly payments will be lower. However, there are many scenarios where putting less money down actually makes more sense. When you work with Fellowship Home Loans, we will give you an honest assessment of your options.
What Types of Mortgages Are Available?
A buyer’s options will depend on his or her loan eligibility and what lenders in the area offer. Depending on their circumstances and personal histories, buyers can take out adjustable-rate mortgages, Federal Housing Administration loans, Department of Veterans Affairs loans, or fixed-rate conventional loans. Most home buyers opt for fixed-rate conventional loans but, for those who aren’t sure which option is best, it’s worth getting mortgage help from a knowledgeable professional.
What Do Payments Include?
Most home buyers realize their monthly payments will include interest on their loans as well as the principal, but that’s not all they’ll have to pay. All borrowers will also have homeowner’s insurance payments and property taxes figured into their monthly payments, and those who put down less than 20% will also be paying PMI each month. That’s why it’s important to specify when making extra payments that they should go toward paying down the principal.
What Is Pre-approval?
This is one of the most common mortgage questions among borrowers who are getting ready to look at properties. Preapproval allows them to get an idea of how much money they will be able to borrow from a lender so they know what price range to look at. Proof of preapproval also makes buyers look more serious when they make offers to sellers.
What Documents Do Home buyers Need to Provide?
When it comes time to take out the loan, buyers will need to provide tax returns, pay stubs, bank statements, and other financial documentation. They’ll also have to sign loan disclosures, credit authorization forms, and other documents. Make sure to send all requested documents to the lender as quickly as possible.
The Bottom Line
Still need to have Mortgage Questions Answered? The best thing to do is to consult a Fellowship Home Loans for mortgage. We will make sure the process is clear to avoid unnecessary complications or unexpected expenses when it comes time to get approved or make an offer on a house. Contact us now to get started!