September 29, 2020

How To Get a Home Mortgage

A lot has changed in the home mortgage business in the last few years, changing the products available and the ease with which you might be approved for a home loan or home refinance loan.

Now that the mortgage landscape is forever altered, how do you get an affordable mortgage?

What is a mortgage?

Simply, a mortgage is a credit-based loan used specifically to buy or refinance a home. Mortgages are originated from lenders, specialized at handling these types of complex credit products. You pay for a home mortgage with monthly payments, similar to other types of credit payments you may make, such as student loans and credit cards. Most home loans don’t come due for many years, depending on how much of the cost you finance, the mortgage rate, and how much cash you can put down, if any.

Getting a Mortgage

If you’re a homebuyer, a reputable real estate agent will have mortgage professionals he or she works with regularly. They can review your financial situation before you begin making offers on homes, and might even get you pre-approved for a home loan so you know up front in what price range you should be shopping. Once you make an offer on a home, they will be ready to show you an estimate of the loan you might expect, including payments, and interest rate.

Refinancing Your Home

If you already own a home and want to refinance to lower your payments or get some cash for your home’s equity, you can contact your lender for refi options. They will give you a whole new home loan.

Remember, a mortgage is a credit-based loan, so mortgage lenders will need to do a credit check on you to finalize any loan documents, all of which are traditionally signed at the closing.

Managing Your Mortgage

Many lenders offer convenient online access to your account so you can manage various aspects of your home or refinance loan: current balance, payments made, interest rate, guidance if you have trouble paying your mortgage, and strategies for paying off your mortgage faster.

Subprime Meltdown Drives Mortgage Changes

In the months leading up to the recent subprime mortgage meltdown, even borrowers with little savings, high debt to income ratios, and poor credit were quickly approved for new home mortgages. Everyone was riding a wave of good fortune. But in hindsight, lending practices were sloppy. When the bottom fell out of the home mortgage market and prices adjusted to reflect reality, millions of new homeowners couldn’t make good on their home loans. Many of them should never have been approved for mortgages in the first place.

Do your homework. You will be better off in the homebuying or refinance market if you do a little research on the current options available for getting a home loan. Tip: typical options depending on your financial situation could include home loans for individuals with credit problems, no money down home loans, FHA loans, and Veterans loans. Find out how each could impact you short- and long-term and be prepared to ask your lender informed questions.

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