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Things To Know Before Applying For A Home Loan

March 1, 2021

applying for a home loan shown with a little house and coinBuying a home can be a very exciting milestone, but it comes with the responsibility of choosing a method of funding the purchase that you can afford over the long term. Many buyers will get a home loan from a bank or other financial institution, but it is important to do your homework before you sign on the dotted line and know all the information before applying for a home loan.

What To Know Before Applying For A Home Loan

Here is a look at what you should know before you apply for a home loan.

What Exactly Is A Mortgage?

A mortgage is a type of home loan in which a lender covers the cost of the home and you pay the money back to the lender. In many cases, the borrower will be required to pay down a portion of the home’s price in the form of a down payment, with the remainder being paid back in monthly installments over the course of many years. This process enables those who do not have enough money saved to purchase a home outright get onto the property ladder.

couple looking to applying for a home loanA mortgage is essentially a form of trust between the borrower and the lender as the lender trusts the borrower to repay the money. However, there is a safeguard: until the borrower has paid back the loan in full, the home technically belongs to the lending institution as a form of collateral that the lender can take away from the borrower should they stop making their loan payments for any reason.

What Different Types Of Loans There Are

It is helpful to be acquainted with the different types of mortgages available before you apply for a home loan. There are two main types of mortgages: fixed-rate and adjustable-rate mortgages.

With a fixed-rate mortgage, the interest rate remains the same throughout the life of the loan. These loans are generally offered with repayment terms spanning 15 or 30 years, and the rate will not change throughout that time regardless of how the economy fares in the intervening years.

With an adjustable-rate mortgage, the interest rate fluctuates over time depending on market changes. This means that the rate may go up or down at various points throughout the life of the loan.

Know What Your Finances Look Like

It is important to have a good idea of your overall financial status before you consider taking out a home loan. One of the biggest factors that will determine your success in securing a mortgage as well as the interest rate you are offered is your credit score. This numerical calculation indicates your creditworthiness and can be obtained from one of the three major credit reporting agencies: TransUnion, Equifax and Experian. A score that is closer to 850 will make you look better from the lender’s point of view.

Be sure to obtain your credit report before applying for a mortgage and review it for any potential errors. Incorrect information could adversely impact your score, so take any necessary steps to correct mistakes or information that is out-of-date on the report.

Know What You Can Afford

You will also need to know how much home you can afford. If you plan to make a 20% down payment and do not have excessive debt, lenders generally suggest that borrowers consider home homes that do not cost more than roughly three times their annual household income. Another way of looking at it is by considering your monthly mortgage payment; it should not exceed 28% of your pretax monthly income.

Understand How Lenders And Brokers Work

When you get a mortgage loan, you can go directly through the bank or seek the services of a broker. An experienced mortgage broker may be able to find you a better deal than you could get on your own thanks to their relationship with lending institutions, and they can save you some of the legwork involved in comparing rates across lenders.

You Can Get Preapproved

Although you may believe that you can afford to pay a specific loan amount, it is important to ensure that a lender agrees. To get an idea of how much money a lender will be willing to lend to you, you can get prequalified.

Prequalification is an early step in the home buying process that only requires basic information that may even be self-reported. Think of it as a ballpark estimate, not to be confused with preapproval.

mortgage that go with applying for a home loanAfter being prequalified, you can obtain preapproval. Obtaining a mortgage preapproval places you in a stronger position when you are negotiating or even looking at homes with a real estate agent. In this process, a prospective lender will take a close look at your financial background and credit report to verify the type of loan you may be eligible to receive and the interest rate for which you would qualify.

Work With A Qualified Mortgage Broker At MyLendingPal When Applying For A Home Loan

If you are considering buying a home, get in touch with the qualified mortgage brokers at MyLendingPal for guidance on the right loan for you. Feel free to reach out and contact us by phone or through our website by requesting an online consultation today.

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MyLendingPal, Inc, NMLS ID #1734346, (www.nmlsconsumeraccess.org); Corporate Office: 5400 Laurel Springs Parkway, Suite 304, Suwanee, GA 30024. Georgia Residential Mortgage Licensee #61544. Principal Loan Originator: Ricky Merchant, NMLS ID: 1517056. Georgia License # 54264. For questions regarding state licensing, please contact (404) 433-8918. Not all products and options are available in all states. Terms are subject to change without notice. Any rates or terms are speculative only and can change without notice.
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MyLendingPal, Inc
MyLendingPal, Inc
5.0
Balachandar Sundaresan
Balachandar Sundaresan
17:30 23 Jun 20
Roger Merchant and his team were very helpful, right from getting a great rate to completing all process on time and being super responsive. Would happily recommend him!!
Dinesh Nair
Dinesh Nair
14:41 30 Jan 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Ramesh Kumar
Ramesh Kumar
02:03 17 Dec 19
I would really recommend Nations First Home Mortgage, if you are looking for the best home mortgage options. I was very much glad to work with this team and they have saved lot of time and money!!
gulshan rai
gulshan rai
03:21 17 Apr 19
I would highly recommend Mr Roger to anyone in the area looking for an amazing lender. He made the mortgage process so easy and effortless. I could tell him and his team were very attentive to all the details that came with applying for a mortgage and were quick to remind me of any deadlines that were approaching.It was super easy to work with Mr Roger.My special thanks to preeti who did an amazing job to get things done in the timely manner. If I had any questions, it was almost like she was waiting at her desk for my phone call to answer the questions immediately. The loans closed on time and without a glitch. I would highly recommend them to anyone
Ajith Nair
Ajith Nair
01:50 13 May 19
We highly recommend Roger for financing mortgage. Roger and his team were excellent through out the process and we had a very smooth purchase. They were always available when we had any questions. It was an amazing experience working with Roger and his team.
Pratul Patwari
Pratul Patwari
13:03 20 Jul 20
Roger Merchant and Priti Vin helped us in buying our first home. They understood our needs and took care of everything for us. They were very good with the communication through the process. They will always be my first choice in future for the mortgage services.
Sujatha Hariharan
Sujatha Hariharan
20:51 26 Jul 20
They were able to find me great rates. Service was quick and communication prompt. The loan process can be daunting as is the document gathering process but this was the easiest and quickest that I have experienced. Highly recommend!
Dinesh Nair
Dinesh Nair
15:53 30 Jul 20
I would definitely recommend MyLending Pal for all mortgage needs. It all started with a great competitive quote on refinance and excellent service continuing all the way until closing. Priti, Ricky and Roger were a pleasure to work with.
Manu Pushpanath
Manu Pushpanath
15:59 29 Jul 20
Great lender to work with. Right from document collection till closing they did it in 2weeks. The fastest closing I heard and get to experience myself. One improvement I suggest is it will be good if the closing attorney can come into the house for completing the closing. Considering current situation it will add a lot of value to the reputation. Thanks Milan and team for a good closing experience.
Sakthi S
Sakthi S
20:46 01 Sep 20
Would definitely recommend Roger and his team.Refinanced for the second time and with roger, I didn’t feel like I refinanced.The process was very smooth and fast.The rates were very competitive and it was amazingworking with Roger and his team.I’d recommend him for sure.
Sunny Patel
Sunny Patel
21:17 01 Sep 20
They were quick, courteous, and professional. They got me an excellent rate and helped make the process smooth. I would recommend using to my friends and family!
Emmitt Rathore
Emmitt Rathore
14:57 22 Dec 20
Roger helped us find an unbeatable rate!His decades of work in the industry made it easy for us to complete many processes with the lender, and helped us close on time!I will definitely be passing the good word around and recommending family and friends to him.I look forward to our next real estate transaction with them.
M Alamoti
M Alamoti
01:02 11 Jan 21
I had the experience of using their service. They know what they are doing. They are very honest, professional and caring. I have no doubt and hesitation to recommend them to anyone who is looking to purchase a home. I am very pleased for their service.
kondal rao
kondal rao
05:36 09 Apr 21
Roger and Team were very helpful. Proactive and honest service. My closing ended in no time. I made the right choice of choosing this team. Worth trying with this Team
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