If you’re a first time buyer, you probably have many questions about the mortgage process. How do you get the best interest rate? What’s the difference between a fixed-rate mortgage and an adjustable rate mortgage? How do you know what term length is best for you? How do points and rebates work? What about a down payment? You can get the mortgage help you need with simple explanations to help you make the right decisions!
 
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Know What You Can Afford

There are many factors that will determine what type of mortgage you can afford, or if you need to refinance. You will have to consider what your credit score is, your income and what your monthly expenses are. How much money will you have for a down payment? There many mortgage calculators available online to give you an idea. Your best option for mortgage help would be to schedule a visit with a lender. A smart choice would be to get pre-qualified for a mortgage before actually applying for the loan. This will give you a ballpark idea of the amount you will be able to borrow.

Mortgage Help with Fixed Rate Versus Adjustable Rate

There are two main options when it comes to mortgage rates. Potential homeowners can choose between a fixed rate mortgage or an adjustable rate mortgage (ARM). Each option will have its pros and cons and can benefit the buyer depending on their needs.

A fixed rate mortgage can be good for first time buyers as well as those who desire the stability of regular monthly payments. This is because with a fixed rate mortgage your interest and monthly payments will not change. You will not have to worry about an increasing interest rate. You have the option between choosing a 15 year or 30 year mortgage. A fixed rate mortgage is the perfect choice for those that like to plan ahead. The benefits will give you the stability to budget your money and reach your financial goals. A fixed rate mortgage will you give the security of knowing exactly what your payments will be each month.

An adjustable rate mortgage is the opposite of a fixed rate mortgage. This is also known as a variable rate mortgage because the interest rate will periodically change based on the index. The index is basically the prime lending rate used by banks. If you decide to choose an adjustable rate mortgage your monthly payments will vary. You may also qualify for a larger mortgage. This would grant you the ability to purchase the home you want and not have to settle for anything less! If you are planning on living in your home for a short amount of time, an adjustable rate would be very desirable. The benefits of this type of loan start out in the beginning with initial low interest rates.

What Documents Will You Need to Apply for a Mortgage?

Applying for a mortgage can be overwhelming to many people. Make sure that you are prepared so that the process can go as smoothly as possible. First your lender will need to look at your credit history. This is important because it will give them an idea of how risky you are as a borrower. The higher your score is the better options you will have for a loan. This will include lower interest rates and larger loan amounts. To make the the process faster you will want to have a signed purchase agreement. This document is a contract between the home buyer and the home seller and it will define the terms and conditions of the sale. You will need to provide proof of income and copies of your W-2 forms. Generally you are required to show original pay stubs from the last 30 days and W-2 forms forms from the past two years. You will need to supply copies of assets information. Lenders require this because they want to be sure that you have enough money to cover the closing costs. Many people will show statements from their checking and saving accounts. It is also acceptable to show proof of stocks,bonds, mutual funds or 401k. Proof of homeowners insurance will required to show that you have coverage on your property. There may be a few more documents you will need, make sure to get in contact with your lender.