Applying for your first home loan can be daunting. You worry about your approval odds and whether you’re getting the best terms possible. It can be tempting to opt for the first lender that comes your way with funding. It’s important to remember that these institutions are looking to attract your business. You hold much of the control in the relationship, so it’s a good idea to take time to research each company and their offerings to be sure you’re getting satisfactory loan terms for you. Consider these five questions to ask lenders when getting a mortgage for the time time. They will help to guide your decision.
1. What documents will I need to have to apply?
You want to be prepared before applying for home financing. No matter what type of loan you opt for, you’ll need certain documents to prove your income and your creditworthiness, among other criteria. Having this information ready in advance can save time and frustration during the application process.
Common documents needed for mortgage approval include:
- Proof of income
- Financial accounts
- Property paperwork
- Miscellaneous documents
Driver’s license, passport, pay stubs, bank statements, investment accounts, liens, proof of downpayment, and divorce papers are examples of the types of documentation you may be required to have.
2. What types of loans are best for my particular situation?
Not every type of loan is suitable for each home buyer. Beware if your loan officer blindly offers you loan options without hearing your particular financial circumstances. Knowing your history and your mortgage priorities will help a professional best tailor financing to meet your specific needs.
3. What type of downpayment will I need?
You may think you need 20 percent down in order to qualify for a home loan. While this is appealing to most financial institutions, it’s absolutely not necessary in today’s market. Having 20 percent upfront could save you over the life of your loan because you won’t need to pay private mortgage insurance. However, there are programs that require as little as three percent down payment. Your lender should be able to advise you on how much you need based on the programs you qualify for.
4. What interest rate will I likely pay?
Interest rate is a significant factor to keep in mind when applying for a mortgage. You could end up paying quite a bit more on a loan with a poor rate. You should also ask about APR, or annual percentage rate. This amount is the total of lender fees and interest rate divided by your mortgage term.
5. Can I get pre-approval?
When looking at homes for sale in Macomb County, it can be quite helpful to get pre-approved for your loan. Pre-approval lets you know exactly what you’re free to spend. It’s also attractive to sellers and can improve the odds of your offer being accepted.
Keep these tips in mind when getting your first mortgage. They will help guide you so that you can find the best lender to suit your needs.