Catlin Capital Answers Your Questions About Home Loans
First, ask yourself how much you can borrow:
Before you start looking at homes, apply for mortgage pre-approval with your trusted mortgage broker, Catlin Capital.
Then, consider these questions:
1. How much can I borrow?
When determining how much you can borrow, lenders will consider your income level compared with debt, your employment status, and your credit history. Talk to us about getting prequalified for a mortgage before you start shopping for your new home. This can make the whole experience go more smoothly.
2. How much money do I need to put down?
Although down payments can be as low as 3% for first-time home buyers (Zero down options available for VA eligible borrowers), there is monthly private mortgage insurance (PMI) added to your payment, if your down payment is less than 20 percent on conforming loan programs.
Your down payment can affect other variables as well, such as your interest rate and monthly payment. Ask us for more information about the minimum down payment required for your loan and decide what’s right for you.
3. What's the interest rate?
We review numerous rate choices with you and explain the difference between the options. Many borrowers want ‘the lowest rate available,’ but there can often be a very high cost to get that. Comparing rate choices and deciding whether paying discount points to buy-down the rate versus selecting a slightly higher rate with no discount point cost, or perhaps even some lender credit, is essential.
4. What’s the difference between a fixed-rate and an adjustable-rate mortgage?
It’s important to compare these two types of mortgages to find what’s best for your situation. Here are some general differences to consider:
Fixed-rate mortgage:
A set interest rate for the life of the loan
Your monthly payments of the principal and interest remain the same for the life of the loan
Adjustable-rate mortgages (ARMS):
Often a lower interest rate fixed for a specific period of time – 5, 7 or 10 years.
After the fixed-rate period, the interest rate may change periodically during the loan term – up, down or not at all.
Your monthly payment may increase or decrease based on the interest rate changes after the fixed-rate period.
5. When can I lock in the interest rate?
Interest rates can fluctuate every day or even several times per day. Once you have an accepted offer on a new home, you will want to lock the rate, especially in an upward rate pressure environment, sufficient to cover your close date. There are 21, 30, 45 or 60 day lock periods. Longer lock periods may be available, but the longer the lock period, the more expensive the rate will be.
Loan Do’s & Don’ts:
Financing Do’s:
Do research loan programs.
Even though we will discuss different home loan solutions, do your own research before speaking with one of our loan officers.
Once you’re ready, the home buying process is going to move fast. It can be difficult to digest everything in a few days — and you might not feel like you have time to explore financing options.
If you settle for the first loan you’re offered, you might miss out on lower rates or a more affordable loan program.
So take your time and educate yourself on different types of loans. Think about what you really want in a mortgage.
Do research your credit score.
A good credit score is important–not just for securing a home loan, but also for other financial components in life. In the months leading up to buying a home, take the time to check your credit score and address any issues (or surprises) that come up.
Since your credit score impacts your loan interest rate, doing what you can to improve your score now could save you thousands in interest over the life of your loan.
Do get pre-approved for a loan.
Before you start looking, find out how much you qualify for. It will help you determine your price range and let sellers know you’re serious.
Financing Don’ts:
Don’t change your job before applying for a home loan.
Now is not the right time to become self-employed or to quit your job. You want to show stability, which means you’ll be less likely to default on the loan.
Don’t lie on your loan application
Sounds simple, right? But don’t leave out any debts or liabilities or fudge your income. It’s fraud.
Don’t co-sign a loan for anyone.
Even if you’re not making the payments on that loan, co-signing increases your debt-to-income ratio.
Catlin Capital’s Bottom Line
It is important to determine exactly what home loans will work best for you and your family’s individual circumstances. There are a lot of do’s and don’ts when it comes to loans, and Catlin Capital has expert consultants that can help guide you through the process and assist you with any questions you have. It is crucial that you have home loan experts you can trust during the process. Once you’re ready, Catlin Capital can quickly go through the pre-approval process with you so you can shop confidently and close quickly.
