September 12, 2021
3 Things to Keep in Mind When Applying for a Mortgage
Important considerations before submitting a mortgage application.
Knowing all the factors that will qualify you for a mortgage can help your chances of securing your dream home. Here are three financial tips to be aware of before applying for a mortgage.
How much will a down payment cost?
Depending on your lender, a down payment will typically be anywhere from 5% to 20% of the total cost of the home. To find the best option for you, ask for quotes from several lenders or brokers and compare the fees and rates they offer. Terms for mortgages can be negotiable, so check with lenders for the best offer. For a personalized quote, visit your local Citizens First Bank branch.
Considering low rates
Keep in mind that a larger down payment can decrease your home’s rate of return on investment and the smaller the down payment, the larger the potential return. Many loan assistance programs can offer even lower rates than average, even zero down. Some mortgages may have misleading low-interest rates so always check the APR.
What debt-to-income (DTI) ratio is acceptable?
This is a comparison of how much money you owe to your earnings, and you can easily find it by dividing monthly debt payments by your monthly income. This number is important to lenders since it is used to determine eligibility for a mortgage. Individuals with a higher debt-to-income ratio have a higher chance of not making monthly payments. The upper limit for a DTI ratio is around 35% of your total monthly income and can lead to higher interest payments or being denied a loan.
Does your credit score qualify you for a loan?
Maintaining a good credit score can help your chances of getting a loan, and then qualify you for the best interest rates on your mortgage. So what numbers are lenders looking for? For a conventional loan, a safe amount would be 650 or greater. FICO scores are like credit scores but also calculate payment history, current debt, kinds of credit used, credit history length, and new accounts. The 670 to 739 is considered a good score, and most lenders will consider this range for a mortgage.
Visit a Citizens First Bank branch in person or online to get a customized mortgage quote.
