Whether it has been a while or if this is your first time, buying a home can be a confusing process. Knowing what choices you need to make and in what order can help. If you are like most people, one of the steps you will need to take is getting a home loan for your new house. Here are some of the most frequently asked questions and their answers, regarding mortgages. These should help get you off to a good start with the mortgage process.
What is a Mortgage?
A is a loan in which a bank or financer gives a buyer money to help them purchase a house. Mortgages are also referred to as home loans. Most Americans use a financial institution to get financing to buy a house. There are multiple variations of mortgages. Each home loan is tailored to the borrower and the lender that provides the funding.
Where Do I Start When Getting a Home Loan?
Initially, when securing a mortgage, you want to find a lender. To do this, you can utilize the internet to search for lenders in your area, ask friends or family for recommendations, or talk to your realtor. Having the right lender can make all the difference in the amount that you will pay over the lifetime of your loan. You should discuss the following with any perspective lenders:
- What kind of interest rates are you offering?
- What types of home loans do you have available?
- How experienced is your team with those types of mortgages?
What Documentation Will I Need to Get a Mortgage?
Like any financing, a home loan requires documentation from the borrower. Any lender is going to want proof that you, as the buyer, can pay them back the money that they are providing. Each lender requests different documents from the borrower; however, there are a few standard pieces of paperwork that every financial institution will ask for.
- Drivers Licenses
- Bank Statements
- Asset Statements
- Current Pay Stubs
- Verification of employment
These items are necessary for a lender to gauge your financial potential. It could be helpful to have these items with you when you first approach a lender regarding an application for a home loan.
Which Type of Home Loan is Best for Me?
There are a few different types of mortgages widely available. The key to knowing which loan is right for you is being knowledgeable about those varieties.
These home loans are what most people think of when they hear the word mortgage. A conventional loan is a mortgage where the lender follows standard national lending guidelines. This type of mortgage typically has the following attributes:
- It requires a down payment of 5 to 20%
- The bigger the down payment, the lower the interest rate.
- Interest rates vary based on the credit rating of the borrower and what the lender is offering.
- A conventional loan typically has fixed and adjustable rate options.
- Commonly offered in lengths as short as five years and as long as thirty years.
These mortgages are available to Veterans and some of their families as a benefit of the VA. If you qualify for this type of home loan, it has the following features:
- It requires a $0 down payment.
- It often has some of the best available interest rates.
- VA loans sometimes have more relaxed lender requirements.
An FHA home loan is only available to those who meet the FHA guidelines. These mortgages are offered to low and middle-income families. Assuming you are a candidate for this type of loan, you will be able to take advantage of the following benefits:
- This type of mortgage can require as little as 3% down payment.
- Your down payment can be gifted to you.
- While this type of loan tends to have a slightly higher interest rate you can get approved with a lower credit rating than most other programs.
Lenders are more lenient with their requirements for this program based upon the Federal Housing Administration’s guarantee of this type of mortgage.
NHL Lending and Your Coral Springs Home Loan
With those most frequently asked questions out of the way, we hope that you will get in contact with us here at Nationwide Home Loans to discuss your mortgage options with us. As stated before, our team is experienced and well-informed regarding all home loan types. We would be glad to answer any other mortgage related questions you might have. Let us assist in making your dreams of owning a home a reality today!