Approaching any big, potentially life-changing decision can be a daunting prospect. Purchasing a new home is one such decision. But with careful planning and help from the right parties, you can take the process of financing a home one step at a time, helping you to understand and avoid the risks and get inside the home of your dreams with as little headache as possible.
Mortgages are available in several different forms, and understanding the unique aspects of each one is important to finding the one best suited for your needs and situation. Most commonly, you will find Adjustable Rate and Fixed Rate loans.
Adjustable Rate loans, as their name implies, can be adjusted down the line, which is useful if you later have the need to refinance. However, payments and interest rates may change after a set time. Fixed Rate loans offer consistency throughout the life of the mortgage, with the payment never fluctuating.
Your credit score is one of the most important aspects of applying for any large loan. At its core, a credit score is a rating of dependability in making payments on time. Every action you take with credit will affect your score, either for better or for worse. When financing a home, your credit score will have a large impact on the whole process. Having a great credit score could potentially result in lower interest rates.
When the process of actually applying for the mortgage begins, be prepared to offer much information about your employment history and income and a wide range of documents, including paycheck stubs, bank statements, tax reports and insurance information. Outstanding loans and expense will be taken into consideration. Your FICO score will play a large role in determining the terms and rates that you are eligible for.