How To Mortgage A Home In 2020
After the corona pandemic, markets are distraught and volatile. A lot of people have lost money this year. Resultantly, they are now falling back on cost-cutting measures to make ends meet.
One area where this practice is obvious is mortgaging a home. Rules and regulations regarding mortgaging a home have changed between and amidst the corona pandemic. The ordeal can become difficult especially if you don’t know what you are doing.
If you are looking to mortgage a home this year, here is a helpful guide that can help.
How To Mortgage A Home In 2020
According to Time, 88% of homebuyers this year are financing their purchases, which shows the popular vote for a mortgage.
One of the simplest ways of getting a mortgage is to show the lender that you can pay back the loan for a mortgage plus the interest.
Lenders play a big role in a mortgage deal. You must always stick with a lender you feel comfortable with and one that understands your situation. Proper communication between you and the lending party can help you get a good deal at a good rate.
Rules And Regularities Of A Mortgage After Covid-19
Due to the corona pandemic, lenders today are very strict regarding who they are lending a mortgage loan to. The minimum credit score requirements have also increased. Lenders, in 2020, are requiring higher down payments; they are triple checking the employment status and they have canceled giving out certain types of loans.
As someone who wants to mortgage a home, you might want to consider that Chase Bank has raised its minimum credit score requirement to 700. The minimum down payment is up to 20% from 3.5%, which is a drastic rise. On the other hand, Wells Fargo and US Bank have adjusted the minimum score requirement to 680 (for FHA and VA loans, which require credit-score requirements as low as 580). Flagstar Bank has increased its minimum score requirements to 640.
Furthermore, due to social distancing, rules have changed. However, many states have fast track approval for digital and mobile notaries, and so on.
The solid grounded you are, the higher the rate of loan approval will be.
Starting The Process Of Mortgaging A Home
Continuing with ‘how to mortgage a home in 2020’, to qualify for mortgaging a home, here are few important things to consider.
Get Your Finances In Order
You must get your finances in order to assess how much you are willing to spend and to get a clearer idea of what you can afford.
Start the process by talking to a loan officer. If you think you cannot buy a home, go for a 6-12 month plan and get your finances in check.
For that, it is important to build your credit and to save your cash. With more cash in hand and with a strong credit score, you can get a better home. Therefore, it is better to have things aligned and sorted before your mortgage.
You should also make sure that you build a strong credit score and save for a down payment for at least 20%.
Strive To Get A Pre-Approval For A Loan
Furthermore, you must also get a pre-approval for a mortgage to get a good idea of how much you can borrow. This will ensure that you are a qualified buyer.
In order to get a pre-approval, a lender will check your credit score and proof of employment, income, and assets.
While a pre-approval letter will not guarantee you to qualify for financing, it will show sellers you have finances to essentially pass a cursory exam from a lender.
The majority of the pre-approval letters are valid for 60-90 days. When you apply for a mortgage, there are many requirements that you will have to fulfill. A pre-approved letter is one. However, once done, a pre-approved letter will help you get a mortgage easier and quicker.
Get The Right Mortgage And Lender
Finally, the next step is to get the right mortgage and lender. For that, it is better to compare rates and fees for 2-3 lenders. Then make a choice.
Another point of concern should be the upfront in fees you will have to pay. Get multiple estimates, compare and use them to negotiate with lenders for better mortgage rates.
You should also consider the mortgage terms. There are 10, 15, and 30-year mortgage terms. All of these have an impact on the amounts you pay every month. It is better to go for a payment that is more practical so stick with a 5 year or 10-year mortgage loan.
There are fixed-rate loans, adjustable-rate mortgages, and others, so you should choose your pick wisely.
Getting a mortgage has become difficult in 2020 because of the pandemic but there are pros and cons of getting it.
Once you have decided to get a loan by following the procedures above, make sure you check the underwriting and closing process. Also, you should ensure that you highlight your assets and go through the process in totality. Lastly, ensure that you have a good background and are applying at the right place to secure a good home.
After getting a mortgage, start by building your home and fix your financials and start working in an upward direction.
Mortgaging a home can become easier if you know what you are doing. If you want to understand how to mortgage a home in 2020, the guide above can help.