3 easy steps to get a mortgage
Examine your finances and compare prices before applying for a mortgage. Looking for a mortgage is the first step to owning a home and perhaps the most daunting, especially if you’re not prepared.
Once a simple task that meant comparing fixed rates among perhaps a dozen or so savings and loan companies, searching for mortgages today is like finding your way through a maze.
There are dozens of types of loans and hundreds of loan programs available through thousands of mortgage brokers, bankers, lenders, finance companies, credit unions, and even stock brokerage firms.
Contrary to popular belief, finding a mortgage doesn’t start with an application.
Education is a better first choice. The sources of information about mortgages are as vast as the number of mortgages available: websites, newspaper articles, mortgage books, seminars and workshops for consumers, financial planners, real estate agents, mortgage brokers, and lenders are all available to help you. in the process.
First, you need to determine how your mortgage payment will fit with your current budget and, to some extent, with your future obligations 15 to 30 years from now.
If you find out too late that you can’t pay your mortgage, not only will you face the possibility of losing the roof over your head, but it could also hurt your ability to buy a home in the future.
Step 1: Examine your finances
If you can afford to buy a home, you need to determine the amount of the mortgage you can afford. Lenders are apt to put your loan application in the best light and qualify you for as much as they are willing to lend, which may be more than you can afford.
It’s up to you to take stock of your current and projected income and expenses to determine what you can comfortably handle each month. Along with your mortgage payment, don’t forget related insurance, taxes, homeowners’ association debt, and any other costs included in your mortgage payment.
Step 2: Find a loan
When you’re ready to shop for a loan, you have two basic types of mortgage shops to shop at: direct lenders and mortgage brokers.
Direct lenders have money to lend. They make the final decision on your application. Lenders have a limited number of internal loans available.
Mortgage brokers are intermediaries who, like you, have many lenders to choose from. Brokers buy from many lenders, each with their own loan offer.
If you have special financial needs and can’t find a lender to meet them, an experienced broker can find the loan you need. However, mortgage brokers are paid a portion of the amount you borrow, some more than others, so it’s worth comparing rates. Today’s internet brokers get perhaps the smallest share, sometimes none at all, and can turn out to be a real bargain.
In addition to looking up the source, you’ll also need to look up the costs of the loan, including the interest rate, broker fees, points (a point is an amount paid to the lender and is charged at one percent of the amount you borrow ), prepayment penalties, loan term, application fees, credit report fee, appraisal, and many others.
Step 3: Apply for a loan
The application process is the easy part, as long as you have gathered the necessary documents to prove the claims you make on the application.
The application will ask you for information about your job seniority, job stability, income, your assets (property, cars, bank accounts, and investments) and your liabilities (car loans, installment loans, mortgages, credit card debt, household expenses). and others) .
The lender will perform a credit check to determine your credit status, but you will need to provide additional documentation, including pay stubs, bank statements, tax returns, investment earnings reports, rental agreements, divorce decrees, proof of insurance and other documentation. A lender who deems you creditworthy will probably hire a professional appraiser to make sure the value of the home he is about to buy is actually worth the amount of your loan.