10 steps to take before applying for a mortgage loan. 1. Develop a budget. Instead of guessing what you can afford to spend on a house, use bank statements and a spreadsheet to create a budget that reflects your actual spending pattern over the last several months to a year. This approach will help you factor in unexpected expenses alongside more predictable costs such as utility...
Loan Term Mortgages are most commonly available for 15-, 20-, or 30-year terms. In general, the longer the term, the lower the monthly payment. However, shorter terms mean you pay less interest over the life of the loan. Fixed- vs. adjustable-rate mortgages A fixed-rate mortgage is one in which the interest rate stays the same as long as you hold the mortgage. An adjustable-rate mortgage (ARM)...
A credit score above 620 is generally considered desirable for obtaining a mortgage. An individual's credit score typically ranges from 300 to 850 with scores above 620 considered desirable for obtaining a mortgage. Buyers may qualify for an FHA loan(link is external) with a score of 500–580, depending on the size of their down payment. The following factors affect your score: Your...
Homebuyers are strongly encouraged to have an inspection before they close on the sale of a home. An inspection can uncover potential structural or mechanical issues. Here are nine questions an inspector should be able to answer to your satisfaction. Do you belong to a professional association? There are two main inspection organizations today, the American Society of Home Inspectors (ASHI) and...
Where you live should reflect your lifestyle. These questions will help you find the best community for you. Federal fair housing law prohibits real estate agents from steering you to one neighborhood or another, but agents they can direct you to resources that will answer your key questions about neighborhoods you're considering. Is it close to my favorite spots? Make a list of activities you...
You can expect a home inspector to evaluate these nice areas or systems. Structure The home’s “skeleton” should be able to stand up to weather, gravity, and the earth that surrounds it. Structural components include items such as the foundation and the framing. Exterior The inspector should look at sidewalks, driveways, steps, windows, doors, siding, trim, and surface drainage. They...
A final walk-through is the time to make sure that your new home is in the same condition you expected it would be. Closing time is hectic, but you should always make time for a final walk-through to make sure that your home is in the same condition you expected it would be. Here’s a detailed list of what to check for on your final walk-through. Basement, attic, and every room, closet, and crawl...
Every lender requires documentation as part of the process of approving a mortgage loan. Here are documents you’re generally required to provide to your mortgage lender. W-2 statements and tax returns — business tax returns if you're self-employed — for the last two or three years for every person signing the loan. At least one pay stub for each person signing the loan. Account...
You'll walk away from the closing table with a big stack of papers. Know what to file away for future reference. Loan estimate Your lender is required to provide you with this three-page document within three business days of receiving your loan application. It will show estimates for your interest rate, monthly payment, closing costs, taxes, and insurance. You'll also learn how your interest rate...
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