HOT PROPERTY: ASK THE EXPERTS
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10 THINGS TO KNOW BEFORE GETTING A MORTGAGE
Conventional wisdom tells us mortgages are good debt because homes typically appreciate in value, but that doesn’t mean you should get a mortgage without careful research.
1. Mortgageprequalification and mortgage preapproval aren’tthe same thing Aprequalificationgives youanestimate of howmuch youcan borrow based on your income, employment, credit and bankaccount information. Preapproval comes from alender who has analyzed your finances carefully and can tell youhow much youmay be able to borrow andwhat your interestmight be.
2. You’ll paymorewithout aminimum 20% down payment Experts encouragebuyers to save adown payment of at least20% before applying for a mortgage, as the larger your down payment, the smaller your mortgagewill be and the less interestyou’ll payoverthe life of your loan.
3. Mortgagefees should be factored in Manybuyers focus solelyonsaving for a down payment and don’tstop to consider the other fees associated with mortgages.You can expect to payfor thingslikecommissions to your realestate agent or broker,application fees,appraisal fees,title search and insurance fees,closing costsand more.
4. The higher your credit score,the better Buyers with lowercredit scoreshave higher interestrates,sotheypay morefor their mortgageovertime. Andifyourcredit score is too low, youmay notbeable to getaloan. Review your credit report and makesureit’s error-free.
5. Lenders valuejob stability While astint of unemployment will obviouslystand out, sometimes even changing companies can makelenders nervous.If you’re contemplating getting amortgage, you should stay in your current job if possible. The same holds true for anyco-signers.Onceyour mortgageisapproved, youcan start pursuing newcareer opportunities again.
6. Mortgagepaymentsmustfit your budget Beforeyou start looking at houses,you should knowwhatyou can realistically afford. As arule, youshouldn’tspend morethan 43% of your income on your monthlydebts.Run your numbers through amortgagecalculator so youcan seewhat’sinyour budget.
7. Thereare manydifferent mortgage options available A30-year mortgageisthe mostpopular,but your loan term could be as little as 10 years. Most mortgages have afixed interestrate, which doesn’tchangeoverthe life of the loan. However, if you’re willing to accept adegree of risk, youmight optfor an adjustable-rate mortgage(ARM).
8. Mortgages requirealot of paperwork Collect your financialrecords beforeapplying –amonth of recent paystubs,two years of tax filingsincluding themostrecent year and the lasttwo or three months of bank account statements.
9. Mortgageofferscan help yousave Manystate and local governments offer first-time homebuyer programs which encourage residents to buy within their home state. The EnergyEfficient Mortgageprogram is ideal for people looking at green homes. Veterans or active-duty servicemembers,or members of the GuardorReserve,may be eligible for aVAloan with lowornodown payment options and no mortgageinsurance requirements.
10.You should avoid making financial changes until your mortgageisfinalized While it can be tempting to financesome furniturefor your newhome, resistthe urge to splurge. And it’snot just credit your lender has their eyeon. Your bank account should stay stable, so don’twithdrawordeposit large amounts of money.
Becoming ahomeowner is part of the greatAmerican dream. Understanding how mortgages work and howyours will affect your financialhealth can help youmanageand make the mostofyour mortgage.
Visit latimes.com/chasemortgage to learn more.
These articles are foreducational purposes only and provide generalmortgageinformation.Products, services, processesand lending criteria describedinthesearticles may differ from those available through JPMorgan ChaseBank N.A. or anyofits affiliates. Formore information onavailable products and services,and to discuss your options, please contact aChase Home Lending Advisor.
All home lendingproducts are subject to credit and property approval. Rates, program terms and conditions aresubject to change without notice. Not all products are available in all states or for all amounts. Other restrictions and limitations apply. Home lendingproducts offered by JPMorganChase Bank, N.A. ©2021 JPMorgan Chase & Co.
