Windows! Back porch! Pool!
The process of searching for a home, daydreaming of all the features you could have, can be a thrilling experience. Then you realize you have to get a mortgage to pay for the house. You may start asking these questions: How long does it take to get a mortgage? Am I eligible? Where do I start?
Don’t worry, home-owner-to-be. We’ll break down some of the most commonly asked questions for you.
How long does it take to get a mortgage?
Between paperwork, applications, gathering the necessary documents and possible requests for resubmitting information, the time to apply for a mortgage loan varies. A perfect mortgage candidate may get a mortgage approval in just a few weeks. Pre-qualifications for mortgages are possible on the same day. However, the average borrower waits one to three months to get a mortgage.
Am I eligible for a mortgage?
Buying a home is an exciting process. Make sure you are prepared for the financial commitment involved. Here are a few things that lenders will look for:
- Credit score. A credit score of 620 is the average minimum for most home owners, although 720 or above is ideal for a favorable interest rate. FHA loans allow for lower credit scores. Lenders will run a credit check, so monitoring your credit score is important for when you start the home buying process.
- Employment. Lenders will assess your job history, so a steady work history is optimal to lenders. However, if you’re self-employed or work on a commission, lenders may require a little more in-depth information.
- Minimum debt. Your debt-to-income (DTI) ratio is an important measure of your ability to repay your loan. The Consumer Financial Protection Board (CFPB) recommends a DTI of 43% or less, but lower is better. Check out your credit cards, student loans and car loans to minimize debt where you can.
- Down payment. Your best-case scenario is to save 20% of the purchase price for your down payment, although a down payment as little as 3% may be acceptable to get an FHA loan.
Where do I start?
Now that you’ve considered your eligibility and how long it takes to get a mortgage, the next step is to contact a trusted lender and get a pre-approval. They will look at your financial situation and give you an estimate of how much you can afford to pay for a house. For more information about your loan options, visit www.freedommortgage.com.
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