Factors that Affect A Mortgage Loan
A mortgage loan is no small thing. It is a long period commitment that usually stays with you 15 to 30 years of your life. Because of this, so many important things have to be thought and planned about and so many factors will be decided whether you will get a mortgage loan or not.
These factors can be divided into two. The first one would be those that you need to think about before taking in a mortgage loan and the second would be the factors about you that lenders have to consider before approving your mortgage loan.
Remember that a mortgage loan takes a long time to close and you have obligations to pay for it seriously and constantly for that length of time. Decide on what mortgage rate you think you can work with. Adjustable rate is risky since interest rates change increasingly which is why it is best to project your income if it can increase over time should you take this. Fixed rate will always be safer because it is stable.
The third step is to determine the length of period you want to have the loan. Most terms are 15, 20 and 30 years. Usually, a shorter term means higher monthly payments. This is good for people whose incomes are higher than average and are stable. But, most average income people go for long term periods because aside from a smaller monthly bill that can fit their budgets, mortgage plans like this bring forth assurance to loaners.
The last step is to assess the closing costs of a mortgage loan and the lowest interest rate that you can get.
Now, let us consider the factors that might affect the approval of your mortgage loan from lenders. There are ten of these which are the following:
5. Available funds. Make sure that you do not make purchases that could consume your available funds before buying a home. Aside from a down payment, you have to consider other expenses such as closing costs.
6. Down payment A bigger down payment assures you of lower interest rates on the mortgage loan.
7. Interest rate. This determines how much you will have to pay each month. It is best to consider "lock-in" fees to guarantee yourself that you still get the advantage should interests rise in the market. Remember that interest rates continuously change.
8. Price Range. From your current financial assessment of your situation and by figuring out your debt-to-income ratio, determine the price of your home. A lender will not approve of a mortgage loan whose price you cannot meet.
9. Lender. Know your lender and inquire about the statistics concerning those mortgage loan applications they turned down and approved. According to financial experts, it is not a good sign if the lender denies 20 percent of those who applied for a mortgage loan.
10. Your honesty. Be honest when filling out all the information the lender requires from you to increase your loan approval. Beware that providing inaccurate information may backfire on you and no lender will be willing to work with you.
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