Whether you’re buying your first house, or just checking out how much house you can afford, buying a home is a BIG decision. After all, you’re going to be living in this house for a long time – and paying for it for a lot longer still. You’ve probably already learned that there are many types of mortgages available in today’s market. You’ll need to weigh your options before deciding on the type of mortgage to get. When searching for a mortgage broker Mississauga, you’ll probably have a lot of questions that need to be answered. Here are some of the frequently asked questions about obtaining a mortgage:
What Types Of Mortgage Loans Are There?
There are many different types of mortgage loans available. The two most popular are fixed-rate and adjustable-rate mortgages, both of which have a minimum down payment and a maximum amortization period. Fixed-rate loans usually have lower monthly payments but are more expensive in the long run. Adjustable-rate mortgages or ARMs offer low initial monthly payments, but the payments rise as interest rates go up.
What Are The Conditions Of The Mortgage?
Before obtaining a mortgage, you should know the conditions of the loan. Some of these conditions include; the maximum amount you can borrow, and if there are any qualifications to obtain the loan.
How Much Down Payment Do You Need?
It is usually recommended to save 20% of the cost of the house for the down payment. However, there are lenders that can accept a lower figure, with some going up to 3%. It’s always best to look at the total amount you’d be paying on the mortgage and then allocate the required down payment.
What Is My Credit Score?
The importance of a credit score cannot be overstated. It will not only affect how much you can get but also how much you can afford. You should take steps to improve your credit score before applying for a mortgage. People with good credit are more likely to be responsible borrowers. They’re less likely than others to skip out on their mortgage payments since their reputations are on the line.
A mortgage lender will want proof of steady income before lending you money, so they may ask you to provide pay stubs and tax returns. They may also inquire about your savings history. Bad credit is no reason for homeownership to be altogether impossible. There are several options available to borrowers with poor credit, including FHA loans.
Can I Afford Monthly Payments?
Before you lock into any mortgage, you’ll want to make sure that you’ve found all the information necessary to qualify for the mortgage. You can check your monthly payment, total loan amount, and make sure you can afford it. This is usually done by running a pre-qualification application which will tell you what factors like credit score would prevent you from getting a mortgage. Therefore, this is an excellent way to check if the mortgage plan is viable or not.
Once you know what credit score you’ll have and an estimated interest rate, it’s time to calculate how much your monthly payments will be. You want to make sure that you can easily afford these payments without having to stress about them or juggle your budget in order to do so. If you’re finding that the payments will be too high, you may want to consider waiting on purchasing a home until you can lower the price or improve your credit score.
How Much Do I Need For Closing Costs?
You also need to plan for closing costs which is the sum of all the fees and charges for processing and signing your mortgage contract. This can vary considerably depending on where you live, type of lending institution, and so forth so it’s important to ask what your total fees and charges will be as they can vary widely.
Is There Any Other Option?
Finally, you need to ask yourself if there are any other options for your mortgage. This is especially true if you find that the available mortgages are more than you can afford. You may be able to find lower interest rates than the ones in place, but it’s best to look at all of your options before committing yourself to anything. If there are alternatives, you’ll want to take them into consideration when making any decision that involves obtaining a mortgage.
