8 Things You Need to Know About Mortgage Loans

Written by Posted On Monday, 20 January 2020 23:09

Step by Step guide on everything you need to know before applying for a mortgage loan. These quick tips will make sure you have a hassle free experience

Applying for a mortgage is definitely something that intimidates people.

Can you relate?

If you're nervous about beginning the loan process but need to start so you can buy a house, you're not alone.

One of the reasons people feel intimidated by this is because they don't understand the steps in the process or the factors that matter to lenders when they evaluate a person's mortgage application.

If you need a mortgage and want to learn what to expect, check out these 8 tips about mortgage loans.

  1. The Lender Will Check Your Credit

Mortgage lenders check credit, and a person's credit can disqualify them from getting approved for a loan or can limit them to a certain loan program.

It might be a good idea to check your credit before applying just to make sure you know what's on your report.

  1. Your Debt-to-Income Ratio Is Extremely Important

Your credit score is highly important to lenders but your debt-to-income (DTI) ratio is almost just as important.

This ratio compares your income to your debts and reveals to a lender if you're in good financial shape or not. It also helps lenders determine how much money to offer a person for a mortgage loan.

Gather up your pay stubs and debt statements before applying because you'll have to submit these types of documents so the lender can calculate your DTI.

  1. Your Job and Job History Matters

Have you held the same job for at least two full years? If not, you might benefit from waiting until you have. Lenders use two years as a basis for approving loans.

  1. A Mortgage Calculator Is a Helpful Tool

It's hard for many people to know how much they can really afford to pay for a house but you can figure this out by using an online mortgage calculator. Doing so will give you a good idea about your price range before you even apply.

  1. There's Multiple Types of Loan Programs

Did you know that there are multiple different types of loan programs? Lenders determine which programs people qualify for as they evaluate mortgage loan applications.

You might qualify for just one type or for multiple types but you should always compare the options you have to choose the best one.

  1. You Might be Able to Buy Down Your Interest Rate

The interest rate you qualify for is based on the loan type, your credit, and other factors. An important thing to know is that you might have the opportunity to buy down your rate by purchasing points.

  1. Fees and Closing Costs Vary by Lender

Another helpful thing you should know is that fees and closing costs vary by lender and by loan program. Shopping around is an option you have when applying for a mortgage, and this is a good way to compare fees and expenses.

  1. A Preapproval Is Not the Same as an Approval

When you're applying for a mortgage, the lender will preapprove your loan if you meet all the criteria. This preapproval does not guarantee the lender will approve the loan when the time comes.

An approval does not actually take place until the entire mortgage loan application is approved through an underwriting department.

Your Next Step: Get Ready to Fill Out Your Mortgage Application

Taking the time to learn these things can help you walk into the process fully prepared and with a good understanding of what to expect when applying for a mortgage.

If you're ready to buy a house and want to begin working on your mortgage application, you can do so with confidence!

Check out our blog for more helpful information.



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Megan Carl

Megan grew up in Los Angeles city and graduated with a degree in Court and Conference Reporting.  She currently resides in Boynton Beach with her husband Richard and two dogs.  Prior to her 13-year-plus Real Estate tenure, she was a court reporter in the New York City metropolitan area. 

Megan has personally built two homes from the ground up - one in Boca Raton and one in Delray Beach - helping to supervise all phases of construction, as well as decorating and renovating other homes.  I have owned four homes in the 22 years I have been in Florida - two in Boca, one in Delray and one in Boynton, along with three rentals in between.  My understanding of the real estate market in Boca, Delray, Highland Beach and Boynton Beach is extensive.  I help to ease the stress of the home-buying experience for my clients.  I am available 24/7 to aid them even further. 

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