If you’re a first-time homebuyer, you may find yourself in need of a mortgage loan. Over 60 percent of homeowners have a mortgage, so becoming familiar with the loan process can be beneficial to your homebuying journey.
A mortgage is a legal agreement between a borrower and a lender where the borrower, once approved for a set amount, pays back the lender over a specified term.
Most mortgage loan terms range from 10 to 30 years, with the 30-year term being the most popular as it often comes with lower monthly payments. However, it’s good to note, the longer you take to pay off the loan, the more money you’ll pay in interest over the lifespan of the loan.
Getting preapproved for a mortgage loan is a great first step, as it allows you to see if you qualify. It also can give you a good idea of the financing you’ll have to work with to purchase a home. During the preapproval process, your lender will collect your financial information to see if you meet their borrowing requirements.
You’ll most likely will need to provide W-2s, tax return info, your credit score and a few other items for preapproval verification.
A mortgage loan is made up of 4 primary components that include the principal, tax, insurance and interest.
The principal amount is the amount of funds still left to pay off the loan, whereas interest is the fee your lender charges for taking out their loan.
Your mortgage provider may also collect property taxes on your behalf through your monthly mortgage payment to be used annually. If you put down less than 20 percent on your home’s down payment, your loan provider may require you to pay for mortgage insurance to protect them if you default on the loan.
Owning a home and paying for a mortgage is a significant commitment, so consider speaking with a lending officer. They can help you explore your options, get a better understanding of the process and find the right loan for your next home purchase.
My name is Lauren and I am passionate about matching people with their perfect home. Even with price constraints, location needs, and other factors that people think limit them, I believe with all my heart that everyone can still have the perfect home for them!
As a happy member of the Hillman Homes team, I can tell you that our boutique office offers you a friendly and customized approach. There are no shortcuts and no one-size-fits-all approach to home buying at Hillman. We work with you the way that is best for you.
