Mortgage Calculator and Process
This mortgage calculator can be used to figure out monthly payments of a home mortgage loan, based on the home's sale price, the term of the loan desired, buyer's down payment percentage, and the loan's interest rate. This calculator factors in PMI (Private Mortgage Insurance) for loans where less than 20% is put as a down payment. Also taken into consideration are the town property taxes, and their effect on the total monthly mortgage payment.
HOW TO GET A MORTGAGE:
STEP 1: DETERMINE HOW MUCH YOU CAN AFFORD.
Speak with your lender about your situation. Lenders will usually determine what you can afford based on your total debt being a percentage of your monthly pre-tax income. This percentage is usually between 28-36%, but this varies depending on the lender.
Other things to consider are:
- Do you have money to use as a down payment?
- Do you have other sources of income from investments?
STEP 2: CHECK YOUR CREDIT.
The first thing a lender will do is check your credit. It is best to clear up any problems and pay down as many debts before you apply for a mortgage. Get your credit reports from Equifax (800-685-1111), Experian (888-397-3742) and Trans Union (800-888-4213).
STEP 3: PRE-QUALIFICATION AND PRE-APPROVAL.
Many sellers will not consider an offer unless accompanied by a pre-approval letter. This should be the first thing you talk about with a lender. It is not a commitment and you can still use a different lender if you so choose.
How to get a pre-approval or pre-qualification letter:
The process can be done entirely over the phone if you choose. You will speak with a lender about what you are hoping to do and give them some of your financial and personal information. They will then analyze the information and see what size of a loan you are pre-approved for. You should get an answer as quickly as 24-48 hours.
STEP 4: GATHER ALL THE NECESSARY PAPERWORK.
Below is a list of paperwork you will most likely need when applying for a mortgage or pre-approval letter:
- W-2’s from at least the previous two years
- Federal tax returns from at least the previous two years
- Investment records such as real estate titles, automobile titles, stock certificates, and records of other assets and investments
A complete list of your creditors along with minimum monthly payments such as:
- Student Loans
- Credit Cards
- Car Loans
- Child Support Payments
- Alimony Payments
- Pay Stubs
- Commissions and bonuses
- Interest and Dividend Income
- Social Security Payments
- Child Support
STEP 5: DECIDE ON A LENDER AND GET A MORTGAGE COMMITMENTAfter applying with multiple lenders and getting them to compete for your business, you should be ready to choose the final one who will fund your loan.
Sometimes the lowest rate does not mean it is the best loan for you. In addition to the rate, you need to check on points (pre-paid mortgage interest), APR, and other fees associated with a given loan.
We know all this information can seem confusing and frustrating, especially to first time buyers. Ask your Warren Residential Group agent about getting started and using some of our preferred lenders.