28 Sep 4 Things You Need to Know About Mortgage Loans
At City Creek Mortgage, we help first-time buyers and those more experienced buyers alike. If this is your first time considering the purchase of a home, you’ve come to the right place to be walked through the process.
Our professionally trained staff is available to explain, encourage, and empower you throughout the homeownership process. We understand this is an exciting (and nerve-wracking) time, and we want you to feel confident throughout.
Considering these four tips puts you on solid ground to get started.
Save for your down payment.
With a few exceptions, like a VA loan or USDA loan, it is almost always expected that borrowers will put cash towards a down payment toward their home.
If you can put down at least 20% of the total price of your home, your chances of being approved at a decent interest rate are increased, and you may be able to avoid mortgage insurance.
If your home costs $250,000, a 20% down payment will be $50,000. You can put down less than 20%, but that will depend on the type of mortgage you’re applying for.
- FHA Loans, backed by the Federal Housing Administration, require as little as 3.5% down.
- VA Loans, guaranteed by the US Department of Veterans Affairs, usually don’t require a down payment at all.
- USDA Loans, backed by the US Department of Agriculture’s Rural Development Program, have no down payment requirement either. USDA loans are for rural and suburban homebuyers who meet the program’s income limits and other requirements.
The down payment can feel like an insurmountable amount of money to save, but don’t be discouraged. At City Creek Mortgage, we work with you from the beginning of the process, walking you through what to expect, so the process is less intimidating.
It may take a little time to get where you’d like to be, but we have the tools to help you get there – faster!
Take charge of your credit report.
There’s no way around it. If you’re applying for a loan, your credit report will be scrutinized. Your credit report will show not only your credit score but evidence of on-time (or late) payments.
We’ve had clients tell us that discussing finances puts them on edge and makes them anxious. The best way to get over that feeling is to take control. At City Creek Mortgage, we show you how to run your finances instead of letting your finances run you.
It’s important that you know the details of your credit report and how to fix any issues. Make sure that your report contains accurate information. You can dispute any issues with the bureau reporting your information and get those items cleared.
It may ease your anxiety to know that even if your credit is less than perfect, there is nothing on your credit report that cannot be fixed with time and effort.
The more you know, the more you can take control and get your credit in the shape you want it to be.
Do your research.
Knowledge is power. The more you know, the better your position. It’s important that you research basic terminology so that you and your lender speak the same language.
Research and think through the different types of loans available. You’ll want to consider the ones that will best suit your needs.
You’ll also want to research your lender. Compare interest rates and lender fees. Think through all your options.
Buying a home is one of the most important financial investments you’ll make in your lifetime. It’s incredibly important for your long-term health and happiness that you are realistic in what you can afford.
One way to determine how much house you can afford is by applying the 28/36 rule. This means you need to think about your debt-to-income ratio, or the total amount of your gross monthly income that’s allocated to paying debt each month.
In the perfect scenario, your DTI, which includes only your mortgage-related expenses, should be below 28%. Your other percentage, which includes the mortgage and all other debt obligations, should be no more than 43%, though under 36% is ideal.
If your DTI is too high, you need to reduce or eliminate debt before you apply for a home loan.
Remember, with City Creek Mortgage, you’re not alone in thinking through your options. Our calculators and team members are here for you!
City Creek Mortgage isn’t your typical mortgage lender. Our professionally trained staff understands the difficulties, complications, and frustrations of shopping for a mortgage.
We are here to walk you through the process, answer all your questions, and help you feel in charge and empowered about your decision-making. It’s important to us that you feel at home, comfortable, and secure with us.