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5 Things To Know About Getting A Mortgage

5 Things To Know About Getting A Mortgage

Buying a home and taking on a mortgage is a huge decision. A home is one of the biggest purchases you’ll ever make, if not the biggest, so it’s important that you do your research and understand what it takes to qualify for the best mortgage terms. Here are a few valuable tips and things you need to know about getting a mortgage.

CREDIT

Your credit score is one of the primary factors that lenders will take into consideration when you apply for a home loan. A low score may leave you unable to secure financing, keeping you from purchasing your dream home. Your credit can also affect the terms of your mortgage, and a higher score may qualify you for better a better interest rate.

Action Items:

  • Check your credit report & look for mistakes
  • Dispute errors
  • Get a free credit report every year

OPTIONS

There are many types of home loans for you can choose from, and the best option will depend on your unique financial situation (every borrower is different).

Action Items:

  • Understand + choose between a fixed-rate mortgage or an adjustable-rate mortgage.
    *With a fixed-rate mortgage, the interest rate will be locked in and will remain the same for the life of the loan. With an adjustable rate mortgage (ARM), the interest rate may change based on the index rate.
  • Understand + choose between a conventional or a government-insured loan
    *Government-insured loans include Federal Housing Administration (FHA) loans, U.S. Department of Veterans Affairs (VA) loans, and United States Department of Agriculture/Rural Housing Service (USDA/RHS) loans.
  • Crunch the numbers using a mortgage calculator

PAPERWORK

Lenders will require a set of documents to process your mortgage application.

Action Items:

  • Get the following documents together:
    • W2’s from current and past employers (or 1099s if you are self employed)
    • Pay stubs
    • Bank statements
    • Past 2 years tax returns
    • List of your debts
    • List of your assets

ESTIMATE CLOSING COSTS

Be aware of the costs associated with closing on a home. Some closing costs are paid to your lender, such as discount points, loan origination, and mortgage application fees. Other closing costs are paid to third parties, such as inspection fee, title search, title insurance, etc.

Action Items:

  • Talk with your lender and make a list of estimated costs

PREQUALIFICATION

Getting pre-qualified by a mortgage lender gives you an idea of how much you can borrow. Before you meet with a real estate agent and begin viewing homes, it is important to secure loan pre-qualification. At Mr. Cooper, it’s as easy as a quick phone call.

Action Items:

  • Talk to a mortgage pro at Mr. Cooper @ (888) 480-2432

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