Month: September 2017

Getting approved for a mortgage is easier than you think, but you do have to be proactive, plan ahead, and set your expectations appropriately before you begin.

In many areas of the country, homes are selling quickly, and there may be fewer properties on the market. So you’ll need to be on your A-game before you start to look.

If you’re planning to purchase a home and wondering how to go about it, a good place to start is with your mortgage professional.

Here’s the way it will go: To gain a baseline of information, your mortgage pro will ask about the basics, such as your income and your credit status.

He or she will run your credit information through what is called an automated underwriting system (AUS). Based on the information you provide, the AUS will show whether you can qualify for a mortgage at that time.

If for some reason you are unable to qualify, the AUS will provide very detailed information on what you need to do to qualify.

Even if you do qualify and are in a position to buy a home at that time, you still will want to find out from your mortgage pro what payments you can afford before you start looking. You don’t want to fall in love with a home only to find out later that it’s out of your reach.

Your mortgage professional can also discuss assets and credit; lender guidelines change frequently, and you will want to know what the current guidelines mean to you.

Credit is extremely important in determining whether a lender will approve you for a mortgage. If you need to pay down or pay off debt, it may take some time. Knowing ahead means you can start now.

Don’t be disappointed later; talk to your mortgage specialist now.

Many first-time home buyers are confused about the way mortgage interest works; in fact, it’s fairly easy to understand once you think about it.

As you know, any type of loan – whether it’s a mortgage or a car loan – requires you to pay interest to your lender for the use of this money while you’re paying it back.

However, the way you pay back a mortgage may be a little different from paying back other types of loans: you make your mortgage in what is called “arrears,” meaning that you pay for the use of the money after you use it.

For example, you take out a mortgage loan on April 15. At the time of closing, you will pay interest from that date through April 30.

Your first mortgage payment will typically be due on June 1 and that payment will cover the principal and interest for the month of May.

The payment due on July 1 will cover the principal and interest for the month of June, and so on, until the loan is eventually paid off.

If and when you go to sell the property, even years later, the process will work itself out as in the following example:

You sell your house and the closing date falls on October 8.

You had just made the October 1 payment, which took care of the principal and interest for the month of September.

So, at closing, you only pay the interest for the beginning part of the month.

More questions? Your mortgage pro can help.