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What You Need To Know Before Getting A Mortgage

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Before Getting Mortgage

Before successfully obtaining a mortgage, there are some key things to remember.

Choose an appropriate lender
Not all lenders are the same. Lenders can be big banks or small portfolio lenders. Not all lenders lend in every area. Not all lenders have the same programs. Do your due diligence here as you did finding your realtor. Talk to your realtor for recommendations.

Understand the full cost of owning a home
Principal, interest, taxes, insurance, and if a condo, monthly maintenance costs… this is what is involved in financing a home. The first, principal and interest, comprise your monthly mortgage. Property taxes are assessed by the county in which you live. On average its 1.2% of your home’s value each year. Homeowner’s insurance is also required.

As noted, if you choose to buy in a community with a Homeowners Association, there are dues to cover common areas, amenities, upkeep and future maintenance.

Credit history is important
The stronger your credit report is, the better. This is important to getting lower interest rates for your mortgage. If necessary, open new credit a few months before buying and maintain good payment history. Obtain your credit score and take necessary steps to improve it.

Get pre-approved in advance
Getting pre-approved is a necessary step. It shows sellers you are serious and have the potential of being approved for a mortgage. It also helps you understand how much you can afford when buying a new home.

Know what lenders will require
When it comes time to be approved for a mortgage, lenders will examine every aspect of your life: full name, address, date of birth, social security numbers, children’s ages, credit report, employment history, pay stubs, tax returns, bank statements, legal settlements and financials of businesses you own. Give them what they ask for and be prepared to explain any negative marks on your credit.

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