Taking out a mortgage on a house is one of the largest investments you’ll ever make. Therefore, it’s important to know what you’ll need to qualify and apply for this type of financing. The criteria differ, depending on the type of a US Bank Mortgage you’re seeking. However, the main differences lie in what interest rates apply and how much you have to remit for a down payment. Some mortgages also require private mortgage insurance (PMI) while others do not.
Fixed and Adjustable Rate Financing for a US Home Bank Mortgage
A common US home bank mortgage may be obtained as a fixed rate mortgage with fixed monthly payments or as an adjustable rate mortgage where the monthly payments change based on the current interest rate. Both conventional mortgages and jumbo financing use this type of financing.
Government Fixed Rate Financing
Government loans feature fixed rate financing. Some of the government-sponsored programs include FHA mortgages at fixed rates and USDA mortgages. Veterans Administration (VA) loans offer up to 100% financing.
Neighborhood Mortgages for Low to Moderate Incomes
A neighborhood mortgage loan is available to low-to-moderate income borrowers and does not come with income limit restrictions. These loans feature a small down payment and do not require private mortgage insurance.
Construction Mortgage Financing
New construction mortgage loans are also available that allow you up to nine months to build a new house.
Basic Requirements for Getting a Loan
The requirements for your loan package depend on what you choose for financing and what you’re able to afford. Basically, however, a mortgage loan comes with the following requirements:
- Prequalification for the loan product – To ensure you are serious about buying a home, you’ll need to go through prequalification first. This first step is done to see how much house you can afford.
- A down payment of around 10%, although you don’t have to put down that much on certain loans. FHA loans may only require you to put down 3.5%. VA loans are available without a required down payment. While you may need to pay a funding fee, you don’t have to submit a down payment or buy monthly insurance.
- Private mortgage insurance – Usually, you’ll need to buy private mortgage insurance for conventional loans. This protects the lender’s interest if you put down less than 20% on the real estate and you happen to default on the loan.
- Closing costs are typically included in mortgage financing. They usually amount to 3% to 6% of the financed amount.
Check Your Credit Report and Score
Before you go through prequalification, you need to make sure your financial house is in order. For instance, you’ll need to check your credit score. A large part of the decision that goes toward getting financed has to do with your credit rating. Therefore, you should get your credit score from the primary credit reporting agencies and make sure the reports are correct and up-to-date. Don’t apply for financing until you’re sure that your credit report is accurate. If you have any disputes, you’ll need to contact the credit reporting bureau. This is important, as a higher credit score means lower interest rates. To increase your score, make sure you make your payments on time on a regular basis. If you are behind on payments, focus on making timely payments a priority.
Know What You Need to Do Before You Apply for Financing
Buying a home is indeed exciting. However, you have to make sure you’re prepared when applying for financing. To get the financing you need, make sure your credit score is good and that you understand the costs involved when financing a property.