Mortgage FAQsA lot has changed in the mortgage industry over the last few years. Many people are confused about what is available, what they can afford, what is right for them, etc.
We are here to try and walk you through the process of understanding how you can afford your next custom home building project.
Private mortgage insurance is a common tool used by lenders, should you be unable / unwilling to make a 20% down payment. This insurance protects the lender should you default on the loan, and is an additional fee added to your mortgage payment each month
Getting pre-approved for a loan is a way to show you're serious about getting started with the building process. This will require that you work hand-in-hand with a lender to complete a loan application; the application will be reviewed and (hopefully) approved. This will help you understand how much home you can afford to build.
Being pre-qualified for a loan indicates that you have been given an opinion, by a lender, on your ability to repay a certain loan amount based on your debt, income, etc.
Not all mortgages are created equally, as various lending methods and loan types exist to help each and every would-be home owner. There are three common types of mortgages:
- Fixed Rate - this mortgage has a "fixed" interest rate that is applied to the loan over a set period of time. The shorter the loan period, the lower the interest rate (but the higher the monthly payment). These loans typically appeal to those who know they will be in their home for 15 - 30 years.
- Adjustable Rate - this loan has rates that "adjust" at certain intervals of time to coincide with market rates. The rate is typically lower in the beginning, and escalates to a higher rate as the loan period goes on.
- Interest Only - when you are looking for a loan with a lower monthly payment, this can be the option for you. The payment made on this loan only goes to cover the interest portion of the loan, for a given amount of time.
- You'll need bank statements
- Try not to withdraw and/or transfer money during the loan process
- Make it a habit of paying all your bills on time; it will help your credit score and will help lower your mortgage payment
- Make sure you are employed throughout the loan process; it's better to be at the same company throughout the process to minimize hassle