Tips to Simplify The Process of Mortgage Approval
A mortgage is a loan, provided by a mortgage lender or a bank, that enables an individual to purchase a home or property. While it’s possible to take out loans to cover the entire cost of a home, it’s more common to secure a loan for about 80% of the home’s value.
A borrower must apply for a mortgage through their preferred lender and ensure that they meet several requirements, including minimum credit scores and down payments. Mortgage applications go through a rigorous underwriting process before they reach the closing phase. Mortgage types vary based on the needs of the borrower, such as conventional and fixed-rate loans.
Types of Mortgages
The two most common types of mortgages are fixed-rate and adjustable-rate (also known as variable rate) mortgages.
One of the most popular types of mortgages is the fixed-rate mortgage. Fixed rate refers to the fact that the interest rate remains the same over the term of the mortgage.
This is in contrast to other types of mortgages like variable rate mortgages in which the interest rate may change. If you have a set budget and want to have a predictable payment from month to month, then a fixed-rate mortgage might work well for you.
With an adjustable-rate mortgage, your payments can increase or decrease with interest-rate changes, based on the terms of your individual loan and a benchmark interest rate index chosen by your lender. In some cases, choosing an ARM over a fixed-rate mortgage could be a solid financial decision, potentially saving you thousands of dollars.
Boost your chances of mortgage
Check your credit
Finding out your credit score should be the first thing you do before considering your home buying options. Your credit score will impact the types of loans you are eligible for, how much money you can borrow and your interest rate.
Check on pre-payment penalties
Something else to keep in mind when finding your perfect mortgage is whether or not you’ll be penalized for paying the mortgage off early. Some homeowners double up on payments to reach the end of their term sooner, regularly or when they experience a cash windfall. Check and make sure you won’t be dinged for actually getting to your goal sooner!
You’ll be better off in the same job
Most lenders will want to see that you’ve been with your employer for a decent length of time before they’ll give you a mortgage, so if you’re thinking of switching jobs, it’s a good idea to hang on until you’ve got your mortgage in place. Usually, it’s a good idea to have been in your existing job for at least three to six months before applying. The more you can save up to put down as a deposit, the bigger the choice of mortgages that will be available to you.
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