In Home Loans

There’s Homeownership Potential for Everyone

Can you remember a time when you really wanted something, but you were afraid to ask? Maybe it was that 10-speed bike you’d been eyeing at the store. A date to the school dance, with that girl or guy. Applying to your favorite college, even though acceptance is a stretch given your test scores and transcript or requesting a coveted position at your company. In situations like these when you’re summoning the courage to ask for something you really want, hopefully you’ve told yourself, “It never hurts to ask!”

If you have a wish to buy a new home and the thought of mortgage requirements has you second-guessing whether you will get approved for a loan, PrimeLending encourages you to stop stressing over the “what-ifs” or assuming the worst … just ask! We know that understanding mortgage calculations, interest rates and mortgage application requirements can be tricky. We also know that in many cases, potential homebuyers, especially first-time homebuyers, overestimate the requirements to gain mortgage approval. That’s why it’s best to seek the advice of a mortgage-lending expert who can assess your needs and recommend your best mortgage plan.

REALTOR® Magazine recently reported that anxiety about high mortgage rates is among the top six homebuyer concerns. But with mortgage rates remaining at record lows (below 4% as of September 17, 2015), now is the time to act on your home-buying dreams.

Worried you won’t qualify for a manageable mortgage rate?

There are seven variables that determine your lowest mortgage rate. If you miscalculate even just one, you could be overpricing your future by the thousands. Talk to your lending expert about:

  1. Credit Score – Credit scores can affect your mortgage rate in much the same way SAT scores impacted your college acceptance. Higher SAT score = more collegiate options. Higher credit scores = lower mortgage rates.But an effective mortgage-lending professional will know of manageable mortgage plans for homebuyers with low, average and high credit ratings. Also, credit reports can be wrong! Homebuyers should review their entire credit report and take steps to resolve any credit history errors.
  1. Home Location – Home is where you hang your hat. And where exactly you hang that hat can affect your mortgage rate, as pricing can differ state-by-state. So don’t forget to designate your state when using home mortgage loan calculators. You can also ask your mortgage-lending professional for current interest rates in your area.
  1. Home Price and Loan Amount – Sometimes a homebuyer’s housing budget doesn’t match up with their ideal neighborhood and/or desired square footage. As you price neighborhoods and houses for sale, remember that the home price, minus your down payment, is the amount you’ll borrow from your mortgage lender. Your total loan amount will affect your interest rate.
  1. Down Payment – Whether you’ve got significant cash saved up in your piggy bank, or you just started setting aside money in recent years, there are mortgage approval options available to you based on your down payment percentage. The higher percentage you can make on a down payment, the lower interest rate; however, there are still affordable options for homebuyers whose down payment is as low as 3%.
  1. Loan Term – The term or length of your loan will affect your interest rate, overall costs and monthly mortgage payments. Typically, shorter-term loans carry a lower interest rate and overall cost, with a higher monthly payment. There are many factors to consider when choosing the term of a loan, like how long you plan to live in the home, building equity at a faster or slower pace, etc. Compare your various loan term options with a home mortgage loan calculator to determine the best fit for you.
  1. Interest Rate Type – Are you the “steady-as-you-go” or “take-my-chances” type? Working with your loan officer, you can choose between a fixed-rate mortgage (popular with homebuyers who plan on living in their home long term) and an adjustable-rate mortgage (popular with homebuyers anticipating another move within a few years ). Fixed rates are just that – fixed and unchanging. A fixed rate will neither decrease nor increase with interest rate shifts. Adjustable rates can potentially decrease, or increase, your monthly payments, as interest rates change. There are advantages to both, and a professional lender can help you choose what’s best.
  1. Loan Type – One of the most critical mortgage qualifying factors is loan type, as there are many types of loans available for homebuyers of all income levels and demographics, from FHA, VA and USDA loans to jumbo and conventional loans, just to name a few. Your interest rate can vary significantly from one loan type to another. Your mortgage-lending professional can help you choose the loan type best designed for you.

Don’t be afraid to fulfill your homebuying dreams. There’s homeownership potential for everyone. Contact an expert to learn out about your mortgage options and the steps to apply. After all, “It never hurts to ask!”

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