Mortgage Basic Questions Answered

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Mortgage Basic Questions Answered.

Why Pre-Qualification is Important

It’s valuable to visit with a mortgage professional early, even if you haven’t decided the kind of house to search for. What for? Perhaps it’s difficult to understand how they can help even before you begin to calculate your offer.

Pre-Qualify

A mortgage professional will help determine how much of a mortgage loan you can afford and how much money you can borrow, by walking you through pre-qualifying. This process outlines your financial situation – your debts, income, career, and down payment money, among other things; it’s short and basic.

You will receive a Pre-Qualification Letter if you qualify, which says that the mortgage company is confident you’ll qualify for a predetermined amount of mortgage dollars.

Pre-Qual Power

Some benefits open to you after you’ve found your next house, and have achieved pre-qualification power. First, it lets you know how much you are able to offer. Being pre-qualified also will make your offer look even better to the home seller, as if you were bringing them a suitcase of cash! They need not worry that that they’re wasting their time if you do not be able to qualify for a big enough mortgage loan. The seller won’t worry if he can count on you to qualify for your mortgage in the amount you’ll need. Your qualifying for your needed mortgage loan amount won’t cause them concern. They have a virtual guarantee that they can trust your buying power. If you are making a down payment on our home of less than 20 percent,

you will most likely have to get Private Mortgage Insurance (or PMI).

It ensures that the lender is guaranteed, by the mortgage insurer,

80 percent of the loan if you default.

The insurance premium amount varies by the loan to value of the house and type of loan.

Why are some rates shown as a percentage and as an APR too?Why are some rates shown as a percentage and as an APR too?

Why are some rates shown as a percentage and as an APR too?

The Annual Percentage Rate is what you will actually end up paying

in addition to the principal. It wraps up the interest, points and fees

in an effective annual rate. (When a lender quotes you a rate,

it will be for interest only, so ask to see the APR.)

As above, when you are using the APR to compare loans,

make sure you are comparing apples to apples.

You need the same loan from different lenders to make the comparison work.

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Mortgage Basic Questions Answered