6 FAQs About Mortgage Lending That Borrowers Need to Know
For today's home buyers, there are a vast number of items to address before you can move into that dream home of yours. When purchasing a home at the Lake of the Ozarks, many questions can arise about the different aspects of the mortgage loan itself, along with the process of approval. MHQ - Mortgage Headquarters has more than 20 years' experience in the mortgage industry, so we know what questions buyer's want answers to. So we've come up with a list of frequently asked questions and are delivering the answer to make your mortgage shopping decision easier! Take a look:
1. Can I Buy a Home When My Credit is Less Than Desirable?
Yes, you can, however it's not always as simple as yes or now. Different loan products have different requirements in regard to credit score. Some loans allow a lower credit score than others. The downside is that the lower your credit score, the higher your interest rate is likely to be, and the lower your chances are for approval. For instance, if your credit score falls below 600, it's not impossible, but you could have a difficult time getting approved for a mortgage.
2. What Documents Will I Need to Apply for a Mortgage?
When applying for a home loan at the Lake of the Ozarks, you'll need to provide a variety of documents that prove your identity and show your income, assets, and debts. This includes driver's license, prior year's W-2, current pay stub, past tax returns, financial statements showing assets and liabilities. Talk to your lender about additional documentation that may be unique to your situation, or click here to view our Loan Application Checklist.
3. How Much Money Do I Need for a Down Payment?
The amount of money you need for a down payment on a house depends on the type of loan you choose. Traditionally, with a conventional loan you would need to put down 20% of the total cost of the home. However, there are loan programs available that allow for as little as 3-5% down. Keep in mind that the more you can put down, the more equity you will have in your home from the get go. To see if you qualify for a loan that requires a smaller downpayment, contact us to see what type of loan best fits your needs.
4. What is APR?
APR stands for Annual Percentage Rate, and is often confused with the interest rate on your loan. The interest rate is the cost of borrowing the principal loan amount. The APR however, is a broader measure of the cost of your mortgage because it takes into consideration not only the interest rate, but also other costs such as broker fees, discount points and some closing costs.
5. What are Points?
Points are fees that can be paid to the lender upfront in exchange for a discount. Most commonly the discount is in the form of a lower interest rate on your loan. One point is equal to one percent of the loan amount. Paying points, or "buying down the rate", can help to lower your monthly mortgage payments. Essentially, the longer you plan to own the home, the more points help you save on interest over the life of the loan.
6. What is Private Mortgage Insurance?
When your down payment is less than 20%, your lender may require you pay for Mortgage Insurance. Private Mortgage Insurance, or PMI, is a type of insurance that protects lenders against loss if a borrower defaults. It's typically required for loans that are not backed by government programs since the lender does not have the security that they would have if the loan were to be funded through a government program.
1. Can I Buy a Home When My Credit is Less Than Desirable?
Yes, you can, however it's not always as simple as yes or now. Different loan products have different requirements in regard to credit score. Some loans allow a lower credit score than others. The downside is that the lower your credit score, the higher your interest rate is likely to be, and the lower your chances are for approval. For instance, if your credit score falls below 600, it's not impossible, but you could have a difficult time getting approved for a mortgage.
2. What Documents Will I Need to Apply for a Mortgage?
When applying for a home loan at the Lake of the Ozarks, you'll need to provide a variety of documents that prove your identity and show your income, assets, and debts. This includes driver's license, prior year's W-2, current pay stub, past tax returns, financial statements showing assets and liabilities. Talk to your lender about additional documentation that may be unique to your situation, or click here to view our Loan Application Checklist.
3. How Much Money Do I Need for a Down Payment?
The amount of money you need for a down payment on a house depends on the type of loan you choose. Traditionally, with a conventional loan you would need to put down 20% of the total cost of the home. However, there are loan programs available that allow for as little as 3-5% down. Keep in mind that the more you can put down, the more equity you will have in your home from the get go. To see if you qualify for a loan that requires a smaller downpayment, contact us to see what type of loan best fits your needs.
4. What is APR?
APR stands for Annual Percentage Rate, and is often confused with the interest rate on your loan. The interest rate is the cost of borrowing the principal loan amount. The APR however, is a broader measure of the cost of your mortgage because it takes into consideration not only the interest rate, but also other costs such as broker fees, discount points and some closing costs.
5. What are Points?
Points are fees that can be paid to the lender upfront in exchange for a discount. Most commonly the discount is in the form of a lower interest rate on your loan. One point is equal to one percent of the loan amount. Paying points, or "buying down the rate", can help to lower your monthly mortgage payments. Essentially, the longer you plan to own the home, the more points help you save on interest over the life of the loan.
6. What is Private Mortgage Insurance?
When your down payment is less than 20%, your lender may require you pay for Mortgage Insurance. Private Mortgage Insurance, or PMI, is a type of insurance that protects lenders against loss if a borrower defaults. It's typically required for loans that are not backed by government programs since the lender does not have the security that they would have if the loan were to be funded through a government program.
Are there any questions you've got about mortgage lending? If so, we'd love to help you out! If you're in need of a mortgage for a new home, need to find out about your refinancing options, or have any other questions pertaining to mortgage lending, trust in the mortgage professionals at MHQ - Mortgage HeadQuarters to have your best interest in mind. We can help you choose a mortgage program that's right for you and your specific needs!
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Mortgage Headquarters of Missouri, Inc
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
Be sure to subscribe to our blog, as we'll be discussing in detail the services that we offer, sharing with you a wealth of helpful mortgage lending information, the differences between different lending options, and much more that'll help to provide you with the knowledge you need to know about mortgage lending options! Be sure to like us on Facebook, Twitter, LinkedIn, and Google+ to stay up to date on all the latest and greatest news we'll be sharing with you!
4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065
Office: (573) 302-9990
Toll Free: (888)799-1206
Fax: (636)648-9917
NMLS # 1229111
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