Are You Ready?
The first step when contemplating a mortgage is determining whether you’re really ready to purchase a home. It’s time for an honest assessment
of your financial health. Consider the following:
- How is your credit? A good credit score goes a long way when it comes to borrowing money these days.
- How does your financial forecast look? Is your job secure? Is your partner’s job secure?
- Are you anticipating any changes to your financial situation? For instance, are you considering having children anytime soon? Are you going to need to buy a new car in the near future? Or maybe you’re up for a big promotion with a hefty pay raise.
- How close are you to paying off credit cards or student loans?
These are just some of the things to consider when assessing your finances. A mortgage lender will help you evaluate and determine just how much
you can afford in a house payment. And remember, just because a lender is willing to lend you a certain amount doesn’t mean you should take the
maximum. Only you can decide how much you are comfortable paying each month.
Types of Loans
There is a wide range of lending options available. The most common types of loans are outlined below.
- Conventional – These loans are made by private institutions for a fixed length of time (10, 15, 20 or 30 years) at a fixed rate.
- Adjustable-rate mortgages (ARMs) – These loans are also offered for fixed length of time, but the interest rate fluctuates based on a number of market factors.
- FHA – These are federally insured loans offered through FHA-approved lenders. These loans have lower down payment requirements and lower closing costs. Click here for more information about FHA loans. Although the US government doesn’t actually make the loan, all loan applications must be approved by the Federal Housing Administration.
- VA – These loans are guaranteed by the US Department of Veteran Affairs. Click here to learn more about VA loans.