5 Things to Know About Mortgages When You Buy a Home
Financing your home through a mortgage can often seem like a stressful and intimidating process. However, you can make the mortgage process seem a bit easier by educating yourself on the following five aspects of mortgage loans.
1. Your Credit Score
One of the most important qualifications for your mortgage is your credit score; however, you don’t need perfect credit to get a decent mortgage. Programs such as those provided by the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) provide mortgages to borrowers with lower than average scores. Conventional programs, including Fannie Mae and Freddie Mac, as well as the U.S. Department of Agriculture (USDA) typically require higher scores for their loans. Regardless of which program fits your needs best, a mortgage professional can analyze your credit and help put you on a path to a higher score.
2. Your Down Payment
While 20% used to be the standard down payment, you probably won’t need to put that much down. VA and USDA mortgages do not require any down payment, FHA allows for 3.5% down, and Conventional loans typically have a 5% down requirement—although in some cases, only 3% is needed.
3. Your Employment History
Most people know that two years of employment is typically necessary for a mortgage. However, if you were in school or were out of work due to circumstances beyond your control (such as Covid), this requirement can be waived. Make sure to have a timeline of all recent work history ready to share with your Loan Officer
4. Closing Costs
Closing costs are paid when homeowners purchase a home, and these fees can quickly add up; though there are some ways to cover them without paying out-of-pocket. Sometimes the seller will pay the closing costs depending on the negotiated sale price. Mortgage lenders may also pay a portion of costs for a small increase on your mortgage rate. If you are a first-time home buyer, some government programs will cover closing costs. There are also gifts from family members that can be used for most mortgage transactions. It is important that you provide bank statements for any accounts you plan to use to cover your portion at closing.
5. Pre-Approvals Are Lifesavers
Getting pre-approved for a mortgage only takes a few minutes and helps you know how much you qualify for before you go shopping for a home. It also gives you leverage with a Seller since they will know that a professional has already reviewed your information.
Contact Your Central Florida Mortgage Experts
For over 25 years, the mortgage professionals at Butler Mortgage have worked with both first-time and seasoned buyers wanting to own a home in Central Florida. To begin finding the right loan solution for you, call 407-931-3800 or fill out our free online consultation form today.