Fixed-rate mortgages are available through conventional loan programs. The mortgage require a specific credit score range for borrowers to qualify. The program doesn’t impose strict restrictions on the property selected by the borrower. Reviewing what to expect when applying for a fixed-rate mortgage helps borrowers determine if the loan is right for their real estate transactions.
What is a Fixed-Rate Mortgage?
A fixed-rate mortgage is a mortgage home loan that has fixed monthly payments that stay consistent throughout the term of the loan. The interest rate stays the same throughout the mortgage, oo. By choosing the loan type, the borrower won’t have to worry about their monthly payment increases at any time and creating a financial hardship. The only drawback to the mortgage loans is that the interest rates are typically higher than other loan products.
What Options Do Homeowners Have?
The borrower gets the option between a 15 and 30-year mortgage. The advantage of the 30-year mortgage that the mortgage payments are lower. The disadvantages are that the borrower pays more in interest and the rates are typically higher. With the 15-year mortgage, the interest rate is lower, but the payments are higher since the mortgage is paid over a shorter length of time. Statistics show that the more borrowers choose the 15-year mortgage over the 30-year mortgage more often. When making the payments, the borrower is paying more on the principal instead of just the interest.
How Do Borrowers Qualify for a Fixed-Rate Mortgage?
A fixed-rate mortgage is typically a conventional loan that requires the borrower to have a credit score of no less than 620. The lender reviews all three credit scores for the borrower and determines if they qualify for the mortgage. When applying for the loan, the borrower must provide details about their income and monthly obligations. The lender reviews the borrower’s income-to-debt ratio and determines if the mortgage home loan is affordable. All information provided to the lender must be verified before the borrower receives an approval.
What Do Applicants Need When Applying for the Mortgage?
When approaching a lender, the applicant needs copies of their checking account statements and details about any savings accounts they have. It’s important for them to bring at least two pay stubs or their income tax return for the previous two years if they are self-employed. Lenders want to review credit card statements, too. A thorough assessment of the borrower’s credit is necessary, and the lender wants to see evidence of on-time payments to existing creditors. Overdrafts on checking or savings accounts can present the wrong impression on the lender, too. It’s necessary to prove that the borrower doesn’t present a financial risk to the lender.
Fixed-rate mortgages prevent a sudden increase in monthly payments or interest. The 15-year mortgages allow borrowers to pay more of the principal with each monthly payment and become a homeowner quickly. The mortgage program doesn’t impose strict restrictions on the property, but the property must pass a property inspection. Homebuyers who want to learn more about the loans can get information from Dustin Dimisa now.
