Do you have questions about how mortgages work? You’re not alone. Mortgages can be daunting, whether this is your first time buying a home or your fifth. But don’t worry—all the basics you need to know about mortgage loan services are in this article. We answer the top five questions asked by aspiring homebuyers, from negotiating interest rates to getting pre-approved. If you have questions that are specific to your situation, talk to a mortgage loan officer in Georgia.
1. Can mortgage interest rates be negotiated?
Yes. It’s always a good idea to compare interest rates from two or three different lenders to know which one offers the best deal. You can even ask the lender to match another lender’s lower rate.
2. I have a low credit score (or no credit score). Can I still get a mortgage?
A conventional mortgage might be out of the question if you have a low credit score. However, you may still be able to get an FHA-backed loan, provided that this is your first time buying a home and that you meet other requirements. Those with credit scores in the 580 range are eligible for FHA-backed mortgages. If your score is lower than that—say, 500—you may still be able to get an FHA loan if you can cover a 10% down payment.
3. What is the difference between an adjustable-rate mortgage and a fixed-rate mortgage?
When you take out a fixed-rate mortgage, you make payments at a pre-agreed interest rate that does not change for the duration of the loan. When you take out an adjustable-rate mortgage, you agree to pay a fluctuating interest rate—which is usually low for the first 5 to 7 years, and can rise or dip every year after.
4. What CTA difference between preapproval and prequalified?
When a mortgage loan officer in Georgia prequalifies you, they run a quick check of your assets and your income. Many sellers and real estate brokers require that you get prequalified before even showing you properties or considering your bids.
Note that a prequalification doesn’t mean that the lender has already agreed to give you money. That only happens when you are preapproved. Pre Approval is a longer process because the lender has to look closely at your credit and financial history, including your income in the last two years, your savings accounts, retirement plans, certificates of deposits, individual retirement accounts, etc. The mortgage loan officer in Georgia will also look at your debt and how responsible you have been at making payments.
5. How much will the bank lend me?
Bank actuaries consider a number of factors, such as your monthly debt payments and debt-to-income ratio. You don’t necessarily have to use all the money they are willing to lend. In some cases, it might be prudent to buy less house than you can afford so that you can comfortably afford the monthly payments without overstretching your finances.
It’s normal to have lots of questions if you are considering mortgage loan services. In fact, you might have even more questions now that you understand the basics. Don’t be shy about asking the loan officer about anything so you can make informed decisions.
