When you are shopping for a home, you should also be looking for the best mortgage for your financial situation. If you are unfamiliar with mortgages, their many parts and pieces might leave you asking, What is a mortgage, exactly?
What Is a Mortgage?
Cutting through their differences, all mortgages are basically designed to finance some type of real estate purchase.
Obtaining a Mortgage
You will need to apply (and be approved) for any mortgage loan you need to purchase a home. These are the key factors that lenders consider when determining your eligibility:
Lenders will pull your credit report and look at your overall score. You can request three free credit reports each year, so go ahead and do that early. This way, you can correct any errors and see how potential lenders will view your credit history.
Income and Employment History
You must have a reliable, steady income and a stable work history when applying for a loan. You will need to have sufficient income to demonstrate that you can pay back the loan you are requesting.
Common Interest Rate Structures
Interest on a mortgage loan can be fixed, adjustable, or a combination of both. Fixed rates stay the same for the length of your loan. Adjustable rates, on the other hand, vary along with the prime rate.
Understanding Repayment Terms
Mortgage repayment periods can be anywhere from five to 30 years. Some jumbo mortgages can even stretch beyond that. Most first-time buyers will shop for a 30-year loan.
Questions to Ask Your Lender
- What is a mortgage repayment period?
- Is the interest rate fixed or adjustable?
- How often will it adjust?
- What are the upfront costs?
- What is your mortgage origination fee?
Where to Learn More
If you are looking for a mortgage or just want to understand more about these loans, we can help. Contact the Lynch Team today to find out what type of mortgage loan fits best into your financial picture.