New Purchase Mortgage

What You Need To Know About Your New Purchase Mortgage

Buying a house doesn't just give you a place to call home. It's also one of the best ways to ensure your long-term financial security.

Before you take out a loan to buy your first home, here are some important things you need to know.

What Lenders Look At

When you apply for a mortgage, lenders look at five things:

1. Your Income. How much do you make a year? Can your salary realistically cover the payments on your mortgage, along with the other expenses of owning a home?
   
   
2. Your Assets. In addition to your income, what other property and sources of money do you have? This could include items of value, as well as stocks.
   
   
3. Your Debt. How much do you already owe? Having some debt is usually considered financially healthy. But if you're already stretching your finances thin, you may have a hard time getting approved for a home loan.
   
   
4. Your Credit. How well you've kept up on your other financial obligations tells the lender how likely you are to make your mortgage payments on time. If your credit is poor, take some time to build your credit before you apply for a home loan.
   
   
5. Property Value. When lenders issue a home loan, the property you buy acts as collateral for that loan. Don't expect lenders to issue a mortgage for a property that is worth less than the loan amount.
   

Getting Pre-Approved
Pre-approval means that a lender has looked at your finances and decided that they're willing to extend you a loan for a certain amount. When a lender pre-approves you, they're making a commitment to give you a loan.

Getting pre-approved lets you know what price range you can expect to find a house in. It also lets sellers know that you are a serious homebuyer — so they'll take your offer more seriously than someone who hasn't even started talking to lenders yet.

Keep in mind that getting pre-approved isn't the same as getting pre-qualified. Pre-qualification is a good way to start the loan process, but doesn't give you the same amount of certainty that pre-approval does.
Ready to get pre-approved? Talk to us today.

The Costs Of A Mortgage

When you make monthly payments on a mortgage, you're actually paying for four things. These are:

1. Principle. This is the outstanding amount of the loan.
   
   
2. Interest. This is the amount that is added to the total of the loan. It's expressed as a percentage.
   
   
3. Taxes. This is amount paid to the government — usually used to pay for schools and other public services.
   
4. Insurance. Most borrowers have to pay for mortgage insurance, which covers the lender in the event that you can't repay the loan. Most lenders also require that you have homeowners insurance to protect against fire and other disasters.

Taken together, these four things are known as your monthly housing expense. Lenders and mortgage brokers often use the term PITI, after the first letters of each expense.

Make Sure You Compare

There are many different kinds of loans available. The best way to find the right one for you is to talk to a qualified mortgage broker.

Mortgage brokers aren't lenders. They're financial professionals who work with several lenders — so they can find you more options for your loan than any single lender would offer. To learn out more about your options and get started on the road to homeownership, contact us today.