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3 Things to Know Before Taking Out a Mortgage Loan
Posted by christian on October 15, 2018

3 Things to Know Before Taking Out a Mortgage Loan

Most adults have the desire to buy a home and with that comes taking out a mortgage loan.  And, while it is easy to get wrapped up in the excitement of buying a new home, it is important to understand the details of a mortgage.  Because a mortgage is a major financial commitment, possibly one of the largest you will ever make, you should fully understand what all is involved in taking out a mortgage loan.

3 Things to Know Before Taking Out a Mortgage Loan

 
1.­ You Don’t Need a 20% (or more) Down Payment to Get a Mortgage Loan

While, generally speaking, it is ideal to put at least 20% down when purchasing a new home, some buyers are unable to come up with that much cash at once. For example, if you are purchasing a home for $300,000, if you were putting 20% down, you would need to have $60,000 saved for your down payment.  There are many mortgage options that allow borrowers to put less than 20% down and even as little as 3%!  Speak to a mortgage lender to learn about what loan options there are if you do not have a 20% down payment.

2. There Is More To Your Monthly Homeownership Expenses Than Principle + Interest

Before you find your perfect home and run to put an offer in, you should know that there will be more to your monthly homeownership expense than just your mortgage’s principle + interest payments. There will be property taxes and homeowners insurance to pay each monthly as well.

3. If You Are Self-Employed – Getting a Mortgage May Be More Complicated Than You Think

Being self-employed can be a great thing for many people, and even very lucrative, but it may impact the home loan process. The main issue is that you need to prove your income but because many self-employed people can have fluctuations in their monthly income, it may seem less reliable to a mortgage lender.  It is ideal to have at least 2 years of reliable, documented income, a good down payment, and good credit. Many people today are self-employed and homeowners so it is certainly not impossible, it just might take a little more work to get approved.