Your Most Common Mortgage Questions Answered
Prospective homebuyers typically start the process with a host of questions. After all, purchasing a home is likely the largest financial transaction you’ll ever make. Read on for the answers to your most burning home mortgage questions.
How Much House Can I Afford?
This is a biggie, because it will determine how close your financial reality can actually bring you to your dream home. While it’s most helpful to get preapproval from a licensed mortgage lender, you can begin to determine a ballpark amount yourself by using an online mortgage calculator. Typically, your mortgage payment should not exceed 30 percent of your monthly income, so you’ll want to know your budget before inputting figures into the calculator. While it can seem time consuming, it’s worth saving yourself from the heartache of falling in love with a house you simply can’t afford.
How Much Do I Need For A Down Payment?
Research shows that lack of down payment savings is the number one reason consumers put off buying a home. And while the old rule of always putting down 20 percent is a thing of the past, most mortgage loans require at least 3.5 percent down. Speaking to a mortgage lender is the best way to know what type of loans you qualify for, and what their down payment requirements are.
Is My Credit Score Good Enough?
Ideally, lenders want borrowers with credit scores of at least 680. If you score above 700, you’ll likely qualify for the best interest rates available. Still, many government loan programs aim at expanding homeownership rates in the U.S., so consumers with scores in the low 500s may still qualify, albeit with higher down payment requirements. Rather than wondering, ask a lender to take a look at your credit. If you don’t qualify for a loan now, take steps to repair your credit for a future home purchase.
Buying a home should never be a guessing game. If you have questions about the process, from the simple to the complex, ask your prospective mortgage lenders.
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