Top 7 Mortgage FAQs Answered
Top 7 Mortgage FAQs Answered
Getting a mortgage for the first time can feel overwhelming. While your family and friends may have tried giving you advice, you may still have questions about the mortgage process.
Here are answers to seven common questions that can help you through your home loan journey:
1. Can I still get a mortgage if I have bad credit or have filed for bankruptcy?
While having a good credit score score can help you get a better interest rate, there isn’t a certain score you need to qualify for a mortgage. Lenders look at a variety of different factors during the mortgage approval process, so a bad score won’t necessarily keep you from getting a mortgage. The same thing is true if you’ve filed for bankruptcy, however you need to make sure you’re eligible to get a mortgage as you will have a waiting period depending on the type of bankruptcy you’ve filed before you can apply for one.
2. How much should I save for a down payment?
While most people assume that they need to put down at least 20%, there isn’t a magic number that homebuyers need to put down. If you don’t have a good credit score, it’s a good idea to put down as much as you can because it signals to your lender that you’re less likely to default on your payment. You should also see if putting more down would decrease your interest rate which can save you a significant amount of money in the future.
3. What are income and debt ratios?
Debt to income ratio or (DTI) is a calculation of your income and how much you owe each month. If you have maxed out your credit cards and only make a modest income, lenders might view this as a red flag and think twice about approving you for a loan. To improve your ratio, try to pay down as much of your debt as possible before applying for a mortgage.
4. What is Mortgage Insurance?
Mortgage insurance is sometimes required by lenders if you’ve previously filed for bankruptcy or have a low credit score. This type of insurance policy helps protect lenders and allows homebuyers who might not normally qualify for a mortgage loan, to be able to qualify for one.
5. Is there anything I shouldn’t be doing before getting pre-qualified?
If you want to put your best foot forward when getting pre-qualified for a mortgage, there are a few things you should avoid doing. Don’t apply for any new loans or miss any loan payments. When lenders pre-qualify someone for a mortgage, they want to make sure they are going to be able to make their payments on time so you don’t want to do anything that could cause any red flags.
6. Can I get a mortgage if I’ve just started a new job?
In the past, some lenders have frowned upon borrowers who apply for a mortgage right after starting a new job but if you already have an established work history, you shouldn’t run into any issues.
7. How can I get pre-qualified?
Lenders like First Option Mortgage can help you get prequalified and answer any questions you have along the way. To start the pre-qualification process, visit https://myindianamortgage.com/apply/ today!
How to Get a Mortgage in Indiana
