Top 5 Mortgage Questions Answered!

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.

How Much Mortgage Can You Afford?

One of the biggest mistakes you can make is buying a home you can’t afford. If you borrow too much, a bad turn of events—like job loss—can quickly make monthly mortgage payments unmanageable. Luckily, there are mortgage loan services that can help you estimate how much you can truly and comfortably spend on a house. It’s also a good idea to remember the following when deciding on how big of a mortgage you should take on.

The formula

Most home buyers can afford to buy a property that’s worth between 2 and 2.5 times their gross income. So if you’re earning $100,000 annually, you should be able to afford a $200,000 to $250,000 mortgage. But that’s just a general guideline. A mortgage loan officer in Georgia will be looking into other factors, too, such as what they think you can afford and personal criteria outside of your finances.

Every lender has a unique set of criteria, but the terms and size of the loan and your ability to purchase will largely depend on these factors:

• Gross income – This is your income before taxes. It includes your self-employment earnings and/or salary, any child support, disability, alimony, or social security you receive, etc.

• Front-End ratio – This is the percentage of your yearly gross income that is dedicated to monthly payments (the principal, interest, taxes, and insurance). In general, monthly payments shouldn’t exceed 28 percent of your gross income. That said, some mortgage loan services allow certain borrowers to go beyond 30 percent or even 40 percent.

• Back-end ratio – Also called ‘debt-to-income ratio,’ this is the percentage of the gross income that goes towards covering debts like outstanding loans, car payments, and child support.

The impact of your credit score

One of the functions of a mortgage loan officer in Georgia is to assess how good you are at paying loans. To do this, they look at your credit score. A low score—which indicates that you’re a higher risk borrower, may result in higher interest (annual percentage rate) on the loan. So, if you’re planning to buy a home in the future, it’s best to start building a good credit score today.

Calculating the down payment

A down payment is usually required by lenders and is typically at least 20 percent of the property’s purchase price. However, some lenders allow a smaller down payment. Of course, the more money you can pay towards the down payment, the less financing you will need.

How lenders make their decision

Lenders will often look at your income, assets, liabilities, and debt. They want to know how much you are making and the current and future demands on your income. Their job is to make sure that you can consistently make payments. Ultimately, it’s the down payment, your monthly expenses, and your income that serve as base qualifiers, and your credit score and history determine the rate of interest.

Don’t be house poor

Keep in mind that a mortgage loan officer in Georgia will consider more than your gross income when establishing how much home you can afford. If you want to be financially prudent, look at your net income or take-home pay instead. Make sure that you’re not putting more than 25 percent towards mortgage payments. Otherwise, you could become ‘house poor,’ without enough money for other essentials and nothing left to save for your retirement.

It’s also important to take a good hard look at your personal financial situation and ask yourself if you’re truly ready for a mortgage. Are you living from paycheck to paycheck? If yes, then the smallest deduction from your monthly budget could be disastrous. Perhaps you should build your income first and secure the stability of your job.

Lenders will only look at your existing debt when calculating the back-end ratio. But what about the other expenses that you might have in the future? Be sure to take into account your children’s college fund, a new car you might want to get someday, or a vacation you want to take.

Don’t forget the costs beyond your mortgage. There are many other expenses that come with being a homeowner, such as home maintenance costs, utilities, décor and furniture, and neighborhood association fees.

Finally, think about your lifestyle. Are there changes you can make to make paying for a home less stressful? Review your spending habits and make adjustments as necessary.

First-Time Home Buyers’ Guide: The Basics of a Mortgage

Buying a home for the first time can be daunting, to say the least. There are a lot of decisions to be made and factors to consider especially when it comes to selecting an affordable mortgage. Overwhelmed? Don’t worry—we’ll make it easier for you. We’ve put together this guide to mortgage loan services to help you save money in the long run.

Getting to know your options.

There are different types of mortgage loan services, but not all of them will be the right fit for your situation. If you are having difficulty putting together enough funds for the down payment, consider the following loans:

• FHA loans – The Federal Housing Administration has insured loans that allow down payments that are as low as 3.5 percent.

• Conventional mortgage – These comply to the standards set by Fannie Mae and Freddie Mac, government-sponsored entities. Down payments can be as low as three percent.

• VA loans – The Department of Veterans Affairs guarantees these loans, and in some cases, they will not require a down payment.

Making a bigger down payment typically means enjoying lower monthly mortgage payments.
If you want the lowest possible monthly payment, consider a fixed 30-year mortgage. Can you afford to pay more monthly? Consider 15- or 20-year fixed mortgage loan services—they will give you lower interest rates.

Saving up for a down payment

If you are planning to buy a home in the next few years, start saving up for the down payment as early as now. The standard used to be 20 percent, but lenders are now accepting much less especially if you are buying your home for the first time. With first-time homebuyer programs, the down payment could be as low as three percent.

However, take note that putting down anything below 20 percent could result in higher costs and spending for mortgage insurance. Also, a small down payment is not always ‘small.’ For instance, if you are buying a $200,000 home and you are putting five percent down, then you still need to save $10,000.

A loan officer from Queensborough National Bank can discuss this matter with you. You can also find a lot of online tips on how to save for a down payment—including saving all your work bonuses and tax refunds, having an automatic savings plan, and meticulously tracking down your progress.

Finding the best lender

It’s always a good idea to compare lenders offering mortgage loan services in your area. Find at least three to four different lenders or banks, including Queensborough National Bank, and consult with their loan officers for advice.

Loan officers understand the challenges of buying a home, and they can help you pre-qualify and minimize the guesswork involved in finding the best mortgage. Don’t hesitate to visit Queensborough National Bank to talk to someone.

Getting pre-qualified

This is a great way to determine how much house you can afford. Getting pre-approval will also show sellers that you are a serious home buyer.

What is Mortgage Loan Processing – Four Stages in the Loan Cycle

Buying a home can easily be one of the largest purchases you’ll make in your lifetime. This is why you need mortgage loan services to help you finance your dream. Getting in touch with a mortgage loan officer in Georgia is a good first step toward easing the financial burden of buying a home. Fortunately, established loan providers like QNB Trust Bank offer great mortgage loan programs and services designed to help clients turn their dream home into a reality.

Acquiring a mortgage loan involves a lot of details that need to be taken care of, making the process quite stressful for most people. This is where a mortgage loan officer in Georgia comes in handy, helping clients work through the entire loan application and approval process so they can finance their dream home fast. There are 4 general stages to the mortgage loan process, starting with the application.

Applying for a loan is the first step in getting approved for mortgage loan services. This is the time to present all required documents, which will determine your qualifications to take out a loan. These documents may include bank statements, tax returns, pay stubs and other such documents, which your loan officer will need so that the lender can review your ability to repay the loan plus interest. Most banks today allow online applications, which makes applying for a loan a lot more convenient for clients.

Step two is document processing. This is where documents are verified and reviewed. When everything is in order, the lender orders an appraisal, along with the title deed, so that the next stage of the loan process can occur.

Following the document processing is underwriting, during which the loan and all supporting documents are submitted to an underwriter for further review and a final approval. The underwriter will set conditions that the loan applicant must meet before the loan can be cleared for closing.

The fourth and final step to the loan process is closing. This is when all documents are thoroughly explained to each party involved. It is also when all paperwork must be signed. Loan closing is also a time for confirming closing costs, payable amounts, and interest rates, after which funds must be transferred in order to complete the process. This is how typical mortgage loan services work through the loan process, although certain steps may vary depending on the loan provider or bank you are working with.