Do I need to get pre-approved for a mortgage?
There are a couple of reasons to get pre-approved First, you’ll find out how much you can afford which
can help when looking for homes. Second, having a pre-approval before making an offer may give you
an edge over other buyers. Lastly, most real estate agents will want a copy of your pre-approval letter
prior to taking you out to see properties.
What credit score do I need?
Your credit score plays an important role in determining whether or not you qualify for a loan, as well as
the type of loan you may qualify for and the interest rate. Credit scores to determine risk. Higher credit
scores usually mean better rates, you may still qualify for a mortgage loan even if your score is less
than perfect.
Before applying for a mortgage, check your credit report to make sure it is accurate. If you find any
issues, take care of them immediately, as this can take a month or longer to resolve. Contact the credit
bureaus and provide any information they require so you can clean up your report and improve your
credit score. Make sure to pay all of your bills on time as well.
How much mortgage can I afford?
You’ll need to take several things into account when determining how much you can comfortably afford.
Consider how much you make, your monthly expenses, how much money you have saved, how much
you can put towards a down payment, current interest rates and current home values.
You should also think about how much you feel comfortable paying each month for a home. Don’t forget
to include other expenses for things like cars, food, gas, groceries, entertainment and clothes. Write
everything down and review your budget so you can see how much you bring in versus how much you
spend each month.
What are the documents needed to apply for a mortgage?
Lenders require several documents when applying for a mortgage. Have your pay stubs, W-2s, tax
returns, bank statements, investment account statements and brokerage account information ready.
Your lender will also provide a list of required documents so you can gather them ahead of time. Be
sure to send everything in a timely manner to help keep things moving.
What is an FHA mortgage?
An FHA (Federal Housing Administration) Mortgage is a loan insured by the government. FHA
mortgages offer down payments as low as 3.5%, which can include the use of gift funds. You don’t
need to meet low-to-moderate income requirements to qualify.
What Is a VA loan?
If you’re a veteran or active-duty servicemember, or a member of the Guard or Reserve, you may be
eligible for a VA loan. However, you still need to meet income and credit requirements. VA loans have
low or no down payment options available and don’t have a mortgage insurance requirement, resulting
in lower monthly payments compared to other options.
How fast can I get a mortgage?
It typically takes 30 to 45 days to get a mortgage, Having all your documents and information ready
and working closely with a mortgage lender will help move things along more quickly.
What is a debt-to-income ratio?
Your debt-to-income ratio compares your gross monthly income with how much you owe each month
(e.g. your estimated mortgage, credit cards, student loans and car loans). To get this ratio, divide your
monthly expenses by your gross monthly income. This number turns into a percentage and becomes
your debt-to-income ratio. Lenders typically want this number to be below 43%, but some programs
allow it to be higher. Your lender can help you determine your debt-to-income ratio and review which
loan programs you may qualify for.
How much of a down payment do I need?
Down payment amounts vary depending on the type of loan. For example, if you’re going with a
conventional loan the down payment is 20%. However, you can put less down, but you may pay private
mortgage insurance (PMI).
Some loan types may require less of a down payment such as only a 3% to 5% down payment. Federal
Housing Administration (FHA) loans require a 3.5% down payment, while the U.S. Department of
Veterans Affairs (VA) loans may not require a down payment.
What is PMI – private mortgage insurance?
PMI is for conventional loans and covers the lender if you stop paying your mortgage and default on
your loan. The yearly cost of PMI is about 1% of your outstanding loan balance and is added to your
monthly mortgage payment. You can request to have PMI eliminated once your outstanding balance
reaches 80% of the original loan amount.