If you are looking to purchasing a home for the first time or if you want to get a new mortgage to buy a vacation home here in , home loans and all the risks and financial requirements associated with them can be confusing. The questions about what is involved with mortgages are never-ending. Though we cannot always anticipate every inquiry, we have made a list of some of the most common home loan questions and their answers.
1. What do I need to do to begin the mortgage process?
To start the mortgage process, you will first need to find a lender. You want to weigh your options and make sure that the mortgage servicer you choose is knowledgeable and has the best rates.
2. What does bank appraisal mean?
A bank appraisal is a professional opinion of the value of your prospective home. If you are looking to buy a new house, the bank will get an appraisal so that they can gauge how much you will need for the mortgage.
3. What documents will I need when I apply for a mortgage?
The requirement for different information needed for home loan applications varies from lender to lender; however, you will find that there are certain documents that every lender requires.
- Your driver's license
- Current bank statements
- Current paperwork on any assets
- The last six months of pay stubs
- Employment verification for your current job
- Documentation showing any financial obligations that you pay on a monthly basis
4. How long will the mortgage process take?
5. What is a pre-qualification, and is a pre-approval different?
A home loan pre-qualification is an estimate of how much a person could borrow. The lender provides this information after they collect unverified data from the borrower. Because the information was not substantiated there can be some issues with the validity of the amount calculated. In contrast, the pre-approval for a mortgage is a commitment letter from the lender for the buyer.
6. How much money do I need to save to be able to buy a house?
Most people assume that they will need to save tons of money to buy a home, but that is not always the case. Unfortunately, there is no set value to give for this question. The answer depends on many factors. Some of those factors include:
- What type of loan you are getting
- The value of your mortgage
- What size of down payment you want to pay
- The cost of an appraisal
- The price of getting a home inspection
Some loan programs help by rolling these costs into the mortgage and lowering the initial requirements for buyers. Be sure to discuss what options are best for you with your lender.
7. What type of home loan is right for me?
There are various types of mortgages available, and the best way to know which one is right for you is to know what varieties are out there.
- FHA Mortgages
- Conventional Mortgages
- VA Mortgages
These are just some of the options, and each has its benefits. You will want to talk to your lender about which loan will meet your needs best.
8. What is a mortgage point?
9. Are there programs available specifically for first-time buyers?
There are programs available that cater to new homeowners or first-time buyers. You will want to talk to your lender to see if this is an option that they have available.
10. Will my interest rate fluctuate?
This will depend on the type of interest rate that you have chosen for your mortgage. Most lenders typically offer fixed-rate loans or adjustable rate loans. With the fixed rate your interest should stay at the same percentage after signing your home loan paperwork. If you choose an adjustable rate, there will be changes based upon a set of rules put in place by you and your lender.