Getting Your First Mortgage Loan Tips

·	It pays to shop around for a mortgage online.   Get fast mortgage quotes from at least three companies before deciding.
·	Don't look for a home without being pre-approved for a Mortgage Loan.   You will retain much more negotiating clout, and may be able to save thousands of dollars as a result.   It’s straightforward and easy to do a quick pre-approval online.
·	Don't choose lenders just because they have the lowest rate.    Factors that you should consider include the overall cost of your loan, and pay close attention to the APR, loan fees, discount and origination points.   Points are usually equal to 1% of the loan, and you must decide whether it’s more beneficial for you to pay them up front or spread them over the life of the loan.
·	Provide your mortgage company with documents in a timely manner.   You don’t want to jeopardize your negotiations or your closing by being careless with financial documents.
·	Most first-time buyers don’t know that if they receive money from their parents or relatives as a gift towards a down payment, they need a gift letter stating that the money does not need to be repaid.   Keep the money in your bank account for at least six months before you apply for a Mortgage Loan, as lenders will want to look at your monthly balances for this length of time.   The higher the balance, the more likely you’ll be approved for the loan.
·	Lenders must tell you at closing exactly how many years it will take you to pay off enough of your loan to cancel PMI (private mortgage insurance).   Each year, your mortgage service must provide you with a phone number that you can call for information about canceling your PMI.

FAQ’s About Home Mortgages

Q:	What is the difference between prequalification and pre-approval?
A:	A prequalification is based on information shared between a lender and a potential borrower.   It usually does not incorporate information obtained from a credit report, and instead is a general estimate of the maximum mortgage amount for which you may qualify.   Typically there is no cost or commitment on behalf of either party for this kind of analysis.   A pre-approval is a written loan decision that is a result of a complete mortgage application, and typically requires an application fee.   Borrowers can apply for a pre-approved mortgage prior to signing a purchase agreement for their new home.   The upside of a pre-approval is that it can allow you to lock in a favorable interest rate at the time of your application.   Both of these options are typically available from online lenders, but remember that being pre-approved will enable you to move faster through the lending process after you’ve made an offer on a home.
Q:	How do I know which type of mortgage is best for me?
A:	As you start the process of selecting a mortgage, there are many factors that go into selecting the right mortgage.   While it seems as though there are so many types of mortgages currently available, as you investigate further you’ll realize that there are really only six or seven basic mortgage types offered by lenders.    The best possible mortgage for you will take into account your current monthly income, a reasonable estimate of what your future income will be, and the kind of payment plan that best suits your finances.   You’ll want to research the various mortgage options available to you, which can be done efficiently online.
Q:	What is the minimum down payment that I can make?
A:	Coming up with a down payment has traditionally been one of the toughest obstacles for home buyers.    As a general rule, conventional loans are available with a minimum down payment of 5%.   FHA loans are available with as little as 3-5% down, and increasingly there are low down or zero down options available to borrowers.   With VA loans, veterans are not required to put any money down when purchasing a home.   Since each Home Loan Mortgage Company has its own specific down payment requirements and programs, you can look for the one that best suit your needs.   But remember, the higher your down payment, the less you’ll be paying in interest over the course of your loan.
Q:	What is PMI and do I need it?
A:	PMI is an acronym for private mortgage insurance.   This is insurance that is provided by a private company that protects the lender from losses in the event the borrower defaults on the mortgage.   If a borrower makes a down payment of less than 20%, they almost always will be required to obtain private mortgage insurance, even if they already have a good credit history.   The good news is that PMI automatically cancels when you reach 22 percent equity in your home, in accordance with the Homeowners Protection Act of 1998.   You can also request to stop paying it when you hit the 20 percent threshold.
Q:	What’s the time frame for a lender to close on my home loan?
A:	Many lenders can close your loan from 2 to 3 weeks after you have agreed on a purchase contract.   If you need or want more time, you can take as long as you need, just taking care to close prior to any rate lock expiration dates.   However, many Mortgage Loan companies require a more traditional 30-60 days from a purchase contract to closing.   However, using an online lender can expedite any aspect of the home mortgage process, as online lenders are not constrained by traditional business hours.

Getting Your First Mortgage Loan Tips - Mortgage Loans For You