If you want to own your own home and are applying for a mortgage, you might be a little nervous right now. The American dream is to own your own home, but the high costs can be hard to handle. Also, many lenders will care more about making money than about helping you find a house that fits your budget. Here are some steps you can take to get your first mortgage the right way.
It used to be easy to get a mortgage. People would compare the prices and interest rates of houses they wanted, and once they found a lender they were comfortable with, they would make a big down payment and move in. Things are different now, and it can be very stressful to go through all of your options. Before you start looking for a house, you should educate yourself.
First Steps in Applying for a Mortgage
The first thing you should do is look at what you are making now. What do you make a year? What kind of job do you have? Remember that if you get a mortgage the old-fashioned way, it could take you 15 to 30 years to pay it off, and if you fall behind on your payments, you could lose your home and have your credit ruined. If you can't afford a house, it's best to wait until you can before moving in. This will keep you from getting into too much debt.
How much money do you have?
If you think you can afford a mortgage, you should then figure out how much you can spend. Lenders often give mortgages that are more than you can afford, and it's important to keep this in mind. You will have to pay taxes, insurance, and other costs in addition to the mortgage payment. You should include these costs in your monthly costs.
Apply yourself or through a broker?
When you start looking for a mortgage, you will find two types of lenders: mortgage brokers and direct lenders. People who have money to lend you are the direct lenders. In the end, they are the ones who decide if you can get a house or not. The mortgage broker acts as a middleman, finding direct lenders who can give you the best deal.
Even though a lender may only have a certain number of loans to give out, a mortgage broker usually has access to more than one lender at the same time. If you want a certain type of mortgage, it might be better to go through a mortgage broker than a direct lender. But a mortgage broker will charge you for their services. This could be a certain percentage of the mortgage loan you end up with. Online mortgage brokers can help you save money now that the internet is so popular.
Get The Paper Work In Order
After finding a loan through a direct lender or mortgage broker, the next step is to fill out an application. You will need to fill out a number of things on the application, and it will help if you have some documents to back up your answers. You will have to give information about your income, how long you have been working, and what you own. Also, they will want to know if you have any other loans or credit cards.
After you give this information, the lender will check your credit report. They will also want to see your bank statements and pay stubs from your job. You might also have to give them information about your taxes and insurance. If you have good credit, an appraiser will be hired to make sure that the house is worth the amount of the loan you will get.
