| If you are in the market for a home, chances are you will not be able to write a check to cover the full purchase price. You will need to apply for a mortgage. Here is what you need to know about a home mortgage.
There are Mortgage Loans for Virtually Every Type of Borrower
What we hear about most often are adjustable and fixed rate mortgages. Did you know that there are other types of mortgage loans available? These include:
- Sub-Prime Mortgages for borrowers with less than perfect credit
- Jumbo Mortgages – nonconforming mortgage loans for borrowers requesting amounts that exceed loan limits set by Freddie Mac and Fannie Mae
- Two-step mortgage loans, which include a combination of fixed and adjustable rate periods
- Balloon Mortgages, which offer the convenience of more affordable payments and lower interest at loan inception. Borrowers make a balloon or lump sum payment at the end of the loan term
- Assumable Mortgages – the potential buyer takes over the loan and payments from the current homeowner.
If you are interested in taking on a mortgage or even refinancing your mortgage, one of the above listed mortgage loan options is likely worth researching.
Mortgage Calculators Can Help You Buy a Home without Losing Your Shirt
Whether you are comparing mortgage loans or looking at refinancing mortgage options a mortgage calculator can help you:
- Find the most cost effective home mortgage for your financial and credit situation
- Make objective comparisons without pressure from mortgage lenders
- Save money on your mortgage loan.
Help is Available from a Mortgage Broker
Much about the process of obtaining a home mortgage can seem overwhelming or even confusing. Mortgage brokers can:
- Unravel the home mortgage process by explaining what is unclear and presenting all appropriate options.
- Serve as a liaison between the buyer and lender.
- Prepare necessary documents to secure mortgage loans
- Provide advice on the best home mortgage options.
Obtaining a Mortgage Requires a Great Deal of Paperwork
Mortgage lenders will want to complete a thorough review of your financial history and position. They will be primarily concerned with:
- Your employment history – stable employment strengthens your application
Your debt – high debt weakens your application
- Your debt to income ratio – lenders will want to see that you can comfortably manage current debts in addition to the added expense of monthly mortgage payments.
- Your ability to repay the loan as determined by income and past credit use
- Your current assets
Just When You Think The Application for a Mortgage Can’t get More Involved…It Does
Lenders are also interested in how you will use your mortgage loan. Generally, a mortgage for a single family home to be used as a primary residence is easier to obtain. Finally, lenders look very favorably upon borrowers that are able to contribute their own funds for the down payment. If there is any information on your credit report that you have disputed, but been unable to have removed you still have options. You can:
- Prepare a brief explanation that becomes part of your credit report
- Provide related documents or letters of explanation to your potential mortgage lender.
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