Applying for any type of loan, especially one with the commitment of a mortgage, can be a confusing, complicated process. But it doesn’t have to be. With the wealth of financial information available today, you have the ability to prepare yourself with the correct knowledge before you apply for your loan. A good mortgage calculator can assist you if things get too complex. If used correctly, a mortgage is one of the best loans you can utilize, as its purpose is to move you closer to owning your own home. Follow our simple tips and you’ll be well on your way to a prosperous financial future.
First off, it’s important to know that there are many different types of loans. Personal loans allow you to borrow money for a fixed period and can be spent on a variety of expenses. Depending on the strength of your credit score, you may qualify to be pre-approved for a personal loan. Business loans allocate funds to be used on any expenses associated with starting a business. This is an excellent option for the entrepreneurial minds among us. Perhaps the most common type of loan is what’s known as a mortgage.
Because of its name and some misinformed cultural assumptions, people are often confused by mortgages. Simply put, a mortgage is a loan that you take out to purchase a home. Due to homes being priced higher than the amount of liquid cash most people have on hand, banks offer mortgages to assist new homeowners.
Big banks approved 23% of funding requests, institutional lenders (which include savings banks and life insurance companies) approved 62.8%, small banks approved 48.7%, alternative lenders (like the ones Fundera works with) approved 60.7% in the year 2016. In that same year, credit unions approved 42% of loan applications. To be approved for a loan, you will need to be prepared to place a down payment on your new home purchase. Typically the standard down payment is 3%. Sometimes, depending on your situation, it may be prudent to offer a larger down payment. The bank will also do an assessment of your credit, and require two years of pay stubs to prove that you have a reliable work history. Using a reliable mortgage calculator is a great way to get an idea of the costs associated with preparing to buy a new home.
Though these are just some of the basics of loans and mortgages, cementing these basic concepts in your mind will help you as you continue to educate yourself. By seeking out quality financial information and advice, you are doing yourself a huge favor. If you stay up to date on your finances through the use of reading, using a mortgage calculator, and consulting with knowledgeable experts in the field, you should have no trouble finding a mortgage that works for you and your family.