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Mortgages Demystified by City Creek Mortgage

Here at City Creek Mortgage, we know that if you’re thinking about buying a home, you’ve probably got lots of questions. At City Creek Mortgage, our team takes the time to listen to your concerns, answer your questions, and walk you through the process of homeownership. 

Purchasing a home is a significant investment. Investments take deliberation. That’s important to us! Our most frequently asked questions are explained below, but if you’d rather talk it out, just give us a call. We are here for you! We take the time you need to feel confident about the mortgage process. 

What is a mortgage, exactly? 

A mortgage is a loan of money given to you with specific terms to purchase a house. Typically, when you get a mortgage, you’ll have two pieces of documentation to sign. 

  • Promissory note. When you sign a promissory note, you’re promising to repay the loan. The promissory note goes over your repayment terms and specifies your monthly repayment amount and the loan length. 
  • Mortgage. You’ll also sign the mortgage itself, which contains all the details in the promissory note. The difference is that the procedures and penalties for not paying back the loan are specifically spelled out in the mortgage. Usually, if you cannot pay back your loan and you default on payments, the lender will take your house. Once you pay back the loan, the lien that allows the lender to take your home is removed. 

What kind of mortgage do I need from City Creek Mortgage?  

The kind of mortgage you need will depend primarily on you. One choice to make from the outset is the type of loan you’d prefer: adjustable rate or fixed rate. 

An adjustable-rate loan means that the interest rate can fluctuate over time and with the markets. A fixed-rate loan means you’ll pay the same interest amount for the entirety of your loan.  

For most consumers, a conventional loan is typical. Conventional loans require a slightly higher credit score, and there’s an assumption you’ll put down a larger cash down payment with this type of loan. 

USDA loans provide a lower interest rate and require a lower down payment for those who plan to buy a home in a rural area or on the outskirts of a larger town.  

For veterans, VA loans are a benefit for qualifying active-duty servicemembers, reservists, veterans, and living spouses of those who have been killed in action or died as a result of a service-related disability. The VA offers some of the best interest rates available. 

The type of mortgage you need depends on you! That’s why we like to get to know our clients and talk through all your options. That’s the best way to find the loan and the interest rate that will benefit you most. 

City Creek Mortgage

How do I qualify for a loan with City Creek Mortgage? 

Mortgage lenders look at several factors when helping you qualify for a loan, including income, property, assets, and your debt-to-income ratio. 

One of the first things your mortgage lender will do is run your credit report. That will show your credit score and your existing debts and payment history. The higher your credit score, the better. 

Income is important because that number will be compared to your existing debts so that a clear picture of how much you can afford per month can be established. As a good rule of thumb, your debt-to-income ratio shouldn’t be more than 45% – house payment included. 

The last thing the lender will do is look at your property and assets. An appraiser will make sure the home you’re interested in purchasing is move-in ready and safe. The appraiser will also assign a value to the property.  

Finally, the lender will determine your assets so that you can set aside a down payment. 

How much house can I afford? 

The answer to this question is the whole ball of wax. Being prequalified may help you determine the high end of your budget, but it’s not necessary (or wise) to purchase a house at the top of your pre-qualification range. 

Think through your monthly budget. Write down your income versus your monthly expenses. Be sure to leave money for incidentals that occur – doctor’s appointments, car repair, house maintenance. You certainly want to consider an amount to contribute to savings every month, too. Leave enough room that you can still enjoy things that matter to you – a good book, dinner and a movie, travel with friends. 

It’s important that you don’t overextend yourself. If you’re paying more for your house than you can afford, you’re inflicting a tremendous amount of stress and worry on yourself. No one wants that! Those feelings will keep you from being able to enjoy homeownership. 

About City Creek Mortgage 

We want you to be happy with your mortgage and your new home and work hard to find the right fit for you! Our City Creek Mortgage team will walk you through all your options. We will help you think about the choices that are best for you. 

Go to our website for an Instant Rate Quote. If you have questions, give us a call. We are here for you! 

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