Some of the things to know about getting a home mortgage is that potential homebuyers are always cautioned to be aware of mortgage lending standards and the difficulty they might face when trying to obtain a mortgage. Credit availability is expanding, making it easier to get a mortgage now than it was a year ago. The market is still tight however, and homebuyers should be prepared to shop around until they find a lender who is offering something that will meet the needs of their family.
Other things to know about getting a home mortgage is that mortgage lending companies have high standards so it is important to make sure you and anyone else who will be included on the mortgage have their credit in check. The mortgage market is strict because lenders do not want to be put in a situation where they are forced to repurchase loans that are not paid on. They also do not want to end up in a litigation situation due to loan issues.
The Number of Mortgages That Are Given Out
Due to the strict nature and requirements of the lending companies, the number of mortgages given out has significantly dropped. A report by the Housing Financial Policy Center at the Urban Institute showed that about 6.3 million fewer mortgages were given out between 2009 and 2015. The reasons behind this statistic are strict regulations and policies. These mortgages would have been granted if the lending standards where more reasonable.
Mortgage companies rely on calculations to determine if a home buyer will become delinquent on their payment. They will not give you a loan if you are too much of a risk for them. Credit history has a huge impact on this decision since lenders can see how often you pay back your debts. The history they receive is extensive. This view into your financial past causes lenders to take less risk when lending to you for your mortgage.
The Effect on the Economy
The housing market is recovering at a slower pace than it should since less potential homebuyers are being offered loans. While the market is still recovering with positive trends, fewer buyers can create a strain on other economic factors like home goods or construction jobs. Bottom Line
After the housing market boom and bust, mortgage lenders became stricter in their lending standards. It is not impossible to get a mortgage loan, but it can still be difficult for potential home buyers. Stay on top of your credit and make sure you and anyone else who is applying are in a good financial position so you can be approved for a loan. It is important to research different companies and their requirements to ensure success in getting a mortgage.
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Things To Know About Getting a Home Mortgage
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Don’t underestimate the value of stable employment
While your credit score and the size of your down payment matter, don’t underestimate the value of stable employment. While a stint of unemployment will obviously stand out, sometimes even changing companies can make lenders nervous. If you’re contemplating getting a mortgage, you should stay in your current job if possible. The same holds true for any co-signers. Once your mortgage is approved, you can start pursuing new career opportunities again.
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Choose mortgage that fit your budget
When you start looking for mortgage, you should know what you can realistically afford. As a rule, you shouldn’t spend more than 43% of your income on your monthly debts. Run your numbers through a mortgage calculator before you start looking for a home so you can see what’s in your budget.
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Opt-in for a mortgage with an adjustable interest rate
There are a variety of different mortgage options available to suit all lifestyles and budgets. A 30-year mortgage is the most popular, but your loan term could be as little as 10 years. Most mortgages have a fixed interest rate, which doesn’t change over the life of the loan. However, if you’re willing to accept a degree of risk, you might opt for a mortgage with an adjustable interest rate. These usually have much lower interest rates for a limited amount of time, but the interest rate could become much higher if interest rates rise.
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Avoid making financial changes until your mortgage is finalized
Every financial decision you make before you close. While it can be tempting to finance some furniture for your new home, resist the urge to splurge. And it’s not just credit your lender has their eye on. Your bank account should stay stable, so don’t withdraw or deposit large amounts of money. Once you close, you can spend what you want to make your new home yours. But not until the paperwork is signed and the keys are in your hand.
Becoming a homeowner is part of the great American dream. Understanding how mortgages work and how yours will affect your financial health can help you manage and make the most of your mortgage.
