Ready to buy a house? If so, you’re certainly in good company. There’s arguably never been a better time to make a home purchase. Not only is it summer — which is always a prime buying season — but if COVID-19 taught us anything, it’s that we can work from home. Therefore, many people are looking to upsize in order to accommodate their need for a bigger home office — or a home office. With competition for homes raging like never before, it’s important to be fully prepared to buy. Since you’re probably only going to get one shot at your dream home, it’s wise to make it count. And one way to do this is by connecting with a mortgage company. Up next are three questions you should ask your mortgage lender before you go house hunting.
1. What credit score is necessary to qualify for a loan?
To even get your foot in the door on a home purchase, you’ll need a credit score of a certain minimum. If your score is crazy low, now may not be the time to move forward. Instead, work toward building credit! You can do this in various ways. These include paying all your bills on time, keeping your existing lines of credit open and asking for a higher credit limit. The biggest key is simply not letting yourself get discouraged.
Just because your credit score may be too low to qualify for one loan program doesn’t mean it’s too low to qualify for another. Similarly, your score might not be high enough to qualify for any loan program right now, but it doesn’t have to be this way in six months. Asking your lender where you stand on credit is a critical question that must be answered before you can confidently move forward.
2. What’s my likely interest rate and monthly payment?
While home mortgage interest rates remain extremely low, generally-speaking, it’s best not to make any assumptions. If your financial or credit situation is less than ideal, your interest rate may reflect this. On the other hand, financial readiness can help reduce your rates! As for the amount of your monthly mortgage payment, good luck finding a more important question. In short, it will hinge on several factors. One is your initial principal balance, aka the purchase price. Other factors are your interest rate and your escrow costs (mortgage insurance and property taxes). Your lender — hopefully, Fairway of the Carolinas — can give you a fairly good idea of your total monthly payment once everything is factored in.
3. How much will I need for a down payment?
While this will depend in large part on the loan program you ultimately choose, your lender is the one who can best provide you with this info. While some loans require no down payment, others require a down payment of as much as 20%. No matter what, though, the amount you’ll need to fork over in down payment cash is a key piece of information worth finding out. Thankfully, with the right loan program, the down payment shouldn’t be a problem.
Now that you know the questions you should ask your mortgage lender, it’s time to reach out! Our Fairway of the Carolinas mortgage advisers are eager to offer you a helping hand. Contact us today, and we’ll gladly answer your questions and guide you along the path toward homeownership. Just know we’re here for you whenever you need us.