Looking to acquire a home in the USA? Unless you are incredibly wealthy or saved up enough money to buy your dream home, a mortgage could be your only option. Don't worry, you are not alone. A majority of homeowners in the country use mortgages to buy their homes.
According to industry insights, mortgages are popular in the country because many homebuyers end up paying off their housing debt. For instance, a recent market survey conducted by Zillow showed that 40% of mortgaged homes in the US are now fully paid for. With this in mind, how can you get a good mortgage deal?
Ways of Getting a Mortgage in the United States
1. Understand the US Mortgage Market
There are two main types of mortgages available in the US market: a fixed-rate mortgage and a variable rate mortgage. The fundamental rules of interest and real estate financing apply to both types of mortgages.
Fixed-rate mortgages have a predetermined interest that will be paid over the amortization period. The interest charges for variable or adjustable-rate mortgages, on the other hand, depend on market trends. This means your interest rate might go up or down depending on the performance of the housing market.
The type of mortgage you should go for will depends on your preferences as well as lender. Fixed-rate mortgages have several advantages. For example, getting a good fixed-rate mortgage means that your total cost will be fixed. As a result, market booms and busts won't affect you. A fixed-rate mortgage is good for financial planning and security.
Adjustable-rate mortgages, or ARMS, os the other alternative. It's easier to get approved for an ARM than a fixed-rate mortgage in the US. These mortgages are also generally cheaper in terms of the initial down payment required. The total cost of an ARM in a stable housing market could be significantly lower than of an FRM.
Also, note that your interest rate might decrease after an adjustment. This happens when the housing market experiences a downturn. The adjustment will shield you from having to pay high interest for a low-value property.
Variable-rate mortgages are good for short term buyers, while fixed-rate mortgages are good for long-term home buyers. Some lenders offer mortgages that feature a mix of the two. Keep in mind that mortgage requirements vary from lender to lender.
2. Getting Approved For a mortgage
The 2008 subprime crisis in the US changed how lenders approach mortgages appraisals. If there is one thing the banks learned from the crisis is the need to check a borrower's ability to pay off his or her mortgage on time.
You will need a good enough credit score to get pre-approved for a mortgage US. Lenders rely on a percentage figure known as the debt-to-income (DTI) ratio to determine whether to approve you for a mortgage. How much do you spend from your monthly income to pay off debts?
Here are some of the things you need to do to improve your chances of getting approved for a mortgage:
- Reduce your credit card spending and pay off outstanding balances
- Channel your monthly income through normal banking institutions
- Pay off any high-interest loans
- Pay off or reduce student debt
- File your taxes on time and watch your credit score
- Save enough money for the deposit and closing costs
- Find new income channels; a second job, side business, freelance gig, etc.
- Get a raise, if possible
- Save your bonuses, allowances and other windfalls. You can also reduce or cut household spending.
- Avoid new debt when you are trying to get a mortgage
All these things will contribute towards improving your debt-to-income ratio, and ultimately get your mortgage application approved.
3. Whom Should You Approach for a Mortgage In the US?
There are many financial institutions that offer mortgages in the US. These include major banks and companies dedicated to the mortgage business. Check whether your bank offers mortgages.
You can approach a bank or mortgage company on your own, or hire a professional broker or lawyer to do the paperwork and sourcing on your behalf. Lenders have different offerings and packages. Therefore, shop around to get the best deal.
4. The Process of Getting a Mortgage in the US
Applying for a mortgage in the US may vary from lender to lender, your resident status, and other factors. However, you will need to produce your paperwork, which includes your identification documents, bank statements, and other financial documents. You will also need to fill out the lender's paperwork, wait for the approval, and then pay the deposit.
Ideally, you should have identified a home that you are interested in purchasing before you approach a lender for a mortgage. Some lenders may also pre-approve you for a mortgage, thereby allowing you more time to continue your search for a home with the mortgage already secured.
Read Full Article Here - How to Get A Mortgage in the US
via https://ift.tt/2SOh9iN
No comments:
Post a Comment