If Prospective Home Buyers have mortgage questions, you’ve gone to the opportune place. Not sure how a mortgage functions? Try not to feel terrible—the normal home buyer doesn’t either. Most first-time homebuyers should acquire a mortgage, and this can appear to be a frightening procedure. We’ve compiled some of the most well-known queries would-be homebuyers have about mortgages.
How do I know I’m ready to buy a home?
The decision to become a homeowner will affect you in 2 ways: personally and financially. Your growing family, or want to settle into a community, or maybe you’re just ready to be a homeowner. With that said, prospective home buyers may also be wondering whether or not this will be smart financially. Below are some indicators that your answer may be yes.
- Your budget is big enough to cover the down payment, mortgage payments, and associated homeownership costs.
- Your budget can cover the property taxes and maintenance fees.
- Giving your home a chance to appreciate, you plan on staying put for a while.
- You itemize your tax deductions and are likely to benefit from writing off mortgage interest.
- You have good credit, which can help you get a lower mortgage interest rate.
- Rent in your area is higher relative to the home prices.
If I refinance, can I pay off other debts with my new mortgage?
Yes, with a cash-out refinance prospective homebuyers can take out equity from your property and use it on other debt obligations with higher interest rates.
When is the best time to refinance?
What is the difference between interest rate and APR?
If I default on my loan, is my co-signer responsible for repaying my loan?
What is the difference between a pre-qualification and a pre-approval?
A pre-qualification is an estimate of how much you can borrow and the rates you may be eligible for (as of current rates), based only on your credit report and any information you provided. With Mutual Mortgage, there is no fee to get pre-qualified. To get qualified, we do a soft credit pull to avoid affecting your credit score. A pre-approval will inform us about the exact amount you qualify for based on a complete credit check, evaluation of your employment history, and income/assets. A pre-approval allows you to submit an offer with confidence that you are personally approved for that loan.
Are interest rates going up or down?
So the past few years interest rates have hit historic lows, the Federal Reserve began the process of raising its key interest rate earlier this year in 2017. While the Fed plans to slowly and steadily increase rates over the next few years. For prospective home buyers considering a fixed-rate mortgage, an increase in borrowing rates in the short term should only have a minor effect on monthly payments. However, you should soon lock down the lowest rate possible in your best interest. Prospective home buyers looking to take out an adjustable-rate mortgage face a greater risk over the next several years, with the Fed forecasting a progression of interest rate hikes. If adjustable mortgage rates rise in kind with rates during this period, the monthly payment and total interest cost on an ARM could increase significantly.