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A mortgage is an agreement between an individual and a lender who provides the funds to purchase a property. Over time, the individual needs to make timely repayments to the lender or risk the property getting repossessed. This article presented by Realtor Debbi Rivero will provide you with an all-encompassing mortgage guide to help you navigate through the process.
Who can get a Mortgage?
Any individual who meets the mortgage criteria set by the lender is eligible for a mortgage. While the criteria can vary, here are some conventional mortgage requirements, that most buyers think is necessary to buy a home.
● A strong credit score i.e. 670 and higher.
● A good DTI (Debt-to-Income) ratio between 36-43%.
● Ability to pay at least 20% of the purchase amount as the down payment.
● Provide additional documentation such as employment verification, proof of income etc.
Lenders don’t require it, but consider getting a home warranty to help protect your budget from unexpected repairs. Do some research to find the best home warranty company.
Which Mortgage Type is Best?
The best mortgage for you will depend on your current financial situation, credit score, and repayment plan.
● Government Insured Loan: These loans are backed by the Federal Housing Administration (FHA loans), the U.S. Department of Veterans Affairs (VA loans), or the U.S. Department of Agriculture (USDA loans). These accept credit scores as low as 500, have lenient DTI ratio requirements, and may waive down payment depending on your application.
● Fixed-Rate Mortgage: These have a set interest rate allowing for predictable monthly repayments till the end of the loan.
● Adjustable-Rate Mortgage: After a set period, your interest rate will become adjustable every year, allowing you the advantage of lower payments.
How Can I Get Approved?
It can take up to a month to get approved. The process is as follows:
● A loan processor will then review your application with a strong focus on your credit score, ability to repay, and collateral.
● Next, a home appraisal will be ordered to verify the property’s value meets the loan valuation, according to SmartAsset.
● Post-review, the underwriter will approve, deny or conditionally approve your mortgage.
● If approved, your lender will send a Closing Disclosure (CD) which includes all information related to the loan, to be signed while closing on the home. This CD must be signed by you at least three days before closing.
Now that you have all the important information needed to get a mortgage, go ahead and start your application with confidence. Search for your next home now and contact me, I can help you throughout the home-buying process, so get in touch when you’re ready to start looking.