Understanding what your financing options are before you buy a house is crucial. Buying a house is a long and demanding process. It doesn’t matter where you are from, or where you purchase a home, you will have to spend endless hours working with mortgage lenders. Asking the right questions will help you find and seal the most beneficial and suitable deal. Here are few questions you should be raising:
1.What will my interest rate be?
Your interest rate will be based on how good your credit rating is and the amount of money that is borrowed. The interest rate, loan term, and loan balance are what will determine the amount of your monthly mortgage payment.
2. What type of mortgages are available?
Every lender offers different kinds of mortgages. These loans will differ in interest rates, the amount of the loan, and the longevity of the loan. Typical mortgage loans include:
Fixed-Rate Mortgages (FRM)
Adjustable-Rate Mortgages (ARM)
Veterans Affairs (VA)
Federal Housing Authority (FHA)
3. Which mortgage fits my needs the best?
Your Lender will be able to answer this question after you complete an application and all factors are taken into account i.e. income, assets, the length of employment, credit, debt, down payment, and the amount of money which is being asked for the property for sale.
4. What are the guidelines for being approved for this loan?
Most mortgage lenders require people looking to borrow to meet certain guidelines. Different loans have different guidelines. When you buy a home, you must adequate funds for the downpayment and closing costs. The majority of mortgages require proof of income and ample money for mortgage payments. Your lender will show you loans you qualify for and help you choose the one that is right for you.
5. What is the minimum down payment needed when buying a house?
This will depend on different factors such as credit, type of loan, and the purchase price of the house for sale. Different loans have different down payment requirements most mortgages require at least a 20% down payment.
6. What documents are needed?
Generally, you need photo identification, proof of income, a list of assets and credit history, these are the most important documents that you will need when getting started with buying a home.
7. How long will my loan application take to process?
This depends entirely on if you supply the required documents promptly or not. The availability of the mortgage lender impacts the length of time to complete the process as well. Spring is generally a busier time with more people looking to buy a house, so take this into account as you plan.
8. Will I have to acquire mortgage insurance?
If you put down less than 20% of a down payment when you buy a home, you will most likely be required to attain mortgage insurance. This policy is a safeguard for the lender, providing protection in case the house goes into foreclosure.
9. What will the closing costs be?
Generally, closing costs are 2 to 5 % of the price of the property for sale, but this will vary depending on the property, the location and the lender from whom you obtain the loan. Closing costs are an important consideration when you purchase a house, so do not take them lightly.
Most lenders actually anticipate and welcome these questions as it would clarify your agreement right at the start. So don’t be afraid to raise questions so you can find out if the conditions are most suitable for you or otherwise.