Mortgage Loan Information You Must Know

There are many things to consider when getting a mortgage loan. First and foremost, you must know what you qualify for. There are many factors that you may not have even thought of.

What Will Determine If You Qualify for a Mortgage Loan

Your mortgage can be determined by many factors. It will depend on your income, your expenses, the down payment that you are able to provide, the current predetermined rates, and even your credit score. The most important thing to remember is that the amount you are borrowing should be an amount that you can comfortably pay.

What the Qualifying Guidelines Are

Ask about requirements relating to your income, employment, assets, liabilities, and credit history. Qualifications for first time homebuyer programs, Veterans Affairs, and other government-sponsored programs tend to be remarkably less stringent on their guidelines than banks and other lenders. These programs also tend to be able to approve people who cannot get a loan through other agencies, banks, or companies. It wouldn’t hurt to check these avenues to see if you qualify.

What Can Affect Your Monthly Payment

Firstly, your monthly payment should be something that you can comfortably pay. Even if you are sure that you can make the payment with no problem right now, keep in mind that there are many factors that can affect your ability to make that payment long-term. Starting a family, college tuition, retirement, paying off debts, starting a business, and traveling or vacations are just a few things that can drastically increase or decrease what you can comfortably spend on a home.

Kinds of Mortgages

There are many kinds of mortgages to choose from. Each has its own pros and cons. Fixed-rate mortgages (FRMs) have fixed rates that won’t change over time, meaning you will always make the same payment. Adjustable-rate mortgages (ARMs) are adjustable so rates go up and down as the financial markets change. The rates go up when the economy heats up, and down when the economy drops. There are other, more specialized mortgage loans, such as hybrid loans that combine features of both fixed and adjustable. The rate is fixed for an introductory period – from three years up to ten years – and then they become adjusting at predetermined times. Usually, when the fixed term is longer, the interest rate is typically higher, while the shorter the fixed period, the lower the interest rate. There are other, more specialized loans that include EEMs (energy efficient mortgages), rural housing loans, manufactured home financing, and Federal Housing Administration rehabilitation.

Interest Rate Locking

Lenders quote an interest rate at a specific set cost. However, these companies are traded in financial markets just as stocks and bonds are traded daily. This means that the rates will go up and down all the time as the market fluctuates. If an increase will derail your purchase, then lock in your rate as soon as possible. If you can be more flexible with your payments, you can ‘float’ your rate, waiting for the market to change again and then you can get a much better deal.

Buying a home is an exciting endeavor, but the financial aspects of getting a mortgage loan can be daunting if you do not know what to expect. Keeping this information in mind can help you feel more confident as you begin the process.