Applying for a mortgage loan can be a bit of a hassle especially when you don’t know all of the things that goes into a mortgage application. If your on the verge of purchasing your first home or looking to refinance your property, here are some tips to help you out.
Learn about the types of things required with a conventional mortgage loan. For most homeowners that have a good standing on some things in mortgage, they are able to go ahead and make it a nice down payment of 10-20%. A conventional lender typically requests a higher down payment because they want more security in case of any mishaps (defaults) in the mortgage. Make sure you also have a stable credit score of 700 and up to show that you are capable of making long term payments. Keep an eye on your credit records.
As you begin to refinance your home, keep in mind that a lender seeks a few things from your end. First of all, they want to see at least 12 months of on time mortgage payments. This shows that you can handle a long term amount of payments. Additionally, you should list your income, credit, equity and job history. This includes the places you’ve worked, your employers, and how long. Having stability shows you are less prone to default or in worst cases, foreclose on the property. Having a good sense of trust helps you from the start.
Think of a federal loan to speed up the process. You can always consult a federal lender if you don’t have the equity or credit score. Most federal lenders will let you refinance at 3.5% equity and a credit score of at least 580. This makes it easier to get a federal loan for mortgage. Also, you should know that extra fees are in enclosed such as annual mortgage fees, a monthly mortgage insurance fee, and even higher interest rates. A federal loan like a streamline refinance helps you speed the process of refinancing because you won’t have to go through so much paperwork. Paperwork takes time, energy, and money. However, the only thing you can do in a streamline is help your mortgage stability.
To apply for a cash out refinance, you need to pay for an appraisal fee and even repairs of the federal government seems it necessary to continue with the process. Applying for this particular mortgage refinance may be a bit more time consuming but can be worth it by adding value to the home as well as giving you a chance to use equity towards other expenses like school fees and car fees.
Ultimately, you should discuss with lenders the best plan of attack for each mortgage loan. Find something that’s more within your immediate budget. Also, you should consider the risks of each situation. Depending on the market, some situations may flourish than others from a long term or short term perspective. It all depends on your goals for the mortgage.