As a first time home buyer, you are sure to have many questions about the process. Most first time buyers have no idea what the terms of a mortgage mean as well as what is required. Below are a few questions you can ask a mortgage broker to be sure you understand the process and know just what you are getting into.
What is a Mortgage?
To begin, you must learn what a mortgage is. A first mortgage loan is a specific amount of money provided to you in order to purchase a home. You provide personal details about yourself during the pre-approval process in order to find out how much money you can afford to spend on a new home. Your mortgage will have a set monthly payment that you pay dependent on the total cost of the home, your down payment amount, the interest rate you receive, and term of the loan.
What Do All These Mortgage Terms Mean?
Many of the terms used in the mortgage industry are hard to understand. If you hear words used by your lender that you do not understand, be sure to ask for clarification. A few confusing words include:
- Interest rate—this is the percentage associated with your mortgage and is based on your credit rating and other factors. This number helps determine how much you pay each month on your mortgage.
- Loan term—this is used to describe the length of the loan. In most cases, loans will last from five to ten years. This also dictates the amount of your monthly payment.
- Down payment—this is the amount of money you will provide for your mortgage. This amount can help to bring down the total cost of the loan which helps to lower your monthly payment amount.
- Purchase Price—this terminology is referring to the total amount of the loan, the price in which you will pay for the home.
These are just a few terms used by lenders. Be sure to ask questions if you ever do not fully understand what is being discussed.
How Do I Get Pre-approved?
Pre-approval applications can be filled out by the first time home buyer in order to find out how much you can spend on a new home. Pre-approval means you are serious about buying a home and will help you to receive assistance from realtors as well as show the seller you are interested in their home. With pre-approval, you will know what price range of home to look for as well as have the ability to lock in an interest rate, hopefully a low one! Your lender will be able to provide you with pre-approval applications so that you can see just how much home you can afford and begin the first steps of the mortgage process.
At Mortgage Guys we are open and honest about our service options and work with you so that you fully understand the home buying process. Let us take care of all your mortgage needs by providing the essential information and pre-approval to get the ball rolling!