• Mortgage payment – in addition to interest and principle payments, it will include home insurance and property taxes.  (just a note but can write additional posts and link them)

• Understanding the year lengths of a mortgage and when you should get one. (check out my hidden costs article here because longer time equals more costs)
• Refinancing to a shorter term can save you money. (see my link here on refinancing)

How to get a mortgage

The process of getting a mortgage really isn’t terribly difficult but it certainly can be confusing. With so many terms and conditions associated with a mortgage, the process may be overwhelming. Hoping to provide some clarity to this topic, this article will look at what a mortgage is, and what are some steps you need to take to acquire one.

Before we get started, let’s start with a quick definition for a mortgage. A home mortgage is a loan that financial institutions provide for a house that the loanee, the individual or couple taking out the loan, is required by contract to pay off in a designated period of time with a predetermined interest rate.

Now that we know what a mortgage is, a quick first step to acquiring one is understanding what your credit score is. If you aren’t sure what a credit score is, you can find more information here. The higher your credit score is, the easier the process will be to acquiring your mortgage. Typically, a lender would look for a credit score of 620 or higher.

If you feel you have a decent score, you can go and talk to a mortgage lender (or bank/other financial lender?).

Understanding your DTI ratio and what your down payment would be important points to note at this step.

Additionally, your mortgage lender will ask you to have a few different documents available. First, they will ask for income verification to make sure you are able to support the mortgage payments. This verification will probably include Tax returns as well as W-2 forms or pay stubs. You could also bring any documents related to self-employment income or alimony and child support.

Further documents may include proof of assets and a list of your liabilities such as any credit card debt or student loans.

After choosing your mortgage lender and providing them with the necessary documentation, you can now choose the right loan that works for you. There are three main factors that work in choosing a loan.

First is the length of the mortgage. Most lenders will offer you the typical 15-, 20-, and 30-year mortgages. However, understanding which one works best for you is important. Mortgage length is not a one size fits all. You need to make sure you are getting the right term that fits your specific circumstance. Check out our other article on how to understand which term is right for you.

Another factor in choosing a loan that you need to be aware of is the interest rate. There are multiple factors that effect your interest rate and different lenders may offer you different rates. Don’t be afraid to shop around. Make sure you take the time because even a small percentage different can make a large difference over time.

Finally, you must make sure you are aware of the additional fees that come with a mortgage. Many people are unaware of the terms and additional charges that come up. Knowing what may come up will help you be prepared so you do not get taken advantage of because of your lack of expertise in this specific area.

A final step in securing your mortgage is to consider getting preapproved. Being preapproved is not a necessity to acquire a mortgage. However, it is highly encouraged and will benefit you greatly. What being preapproved does for you as a potential home owner is it gives you an edge over other potential home buyers.

It demonstrates to the sellers of homes that you are definitely able to secure the money needed to purchase their home (if it’s in your range). This assurance is key in helping them choose you over the other potential offers.

A key note here is that being preapproved does not mean that you have the money in hand, but simply that you have secured a future loan with a mortgage lender and are already started in the home buying process.