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Mortgage Facts

The Pre-approval Process A pre-approval is when a potential mortgage lender looks at your finances to find out the maximum amount they will lend you and what interest rate they will charge you. With a pre-approval, you can: know the maximum amount of a mortgage you could qualify for estimate your mortgage payments lock in an interest rate for 60 to 120 days, depending on the lender The pre-approval amount is the maximum you may get. It does not guarantee that you'll get a mortgage loan for that amount. The approved mortgage amount will depend on the value of your home and the amount of your down payment. It may be a good idea to also look at properties in a lower price range so that you don’t stretch your budget to its limit. Remember that you’ll also need money for: closing costs moving costs ongoing maintenance costs   Your Credit Bureau Part of the pre-approval process is a review of your credit bureau. During the application process we will look at your credit history to insure there are no mistakes.…

How Much You Need For A Down Payment Minimum down payment A down payment is the amount of money that you put towards the purchase of a home. The down payment is deducted from the purchase price of your home. Your mortgage loan will cover the rest of the price of the home. The minimum amount you'll need for your down payment depends on the purchase price of the home you'd like to buy.   The minimum amount you'll need for your down payment based on the purchase price of your home   Purchase price of your home                                                   Minimum amount of down payment $500,000 or less                                                                              5% of the purchase price   $500,000 to $999,999                                                                    5% of the first $500,000 of the purchase…

Mortgage Loan Insurance Mortgage loan insurance protects the mortgage lender in case you’re not able to make your mortgage payments. It doesn't protect you. Mortgage loan insurance is also sometimes called mortgage default insurance. If your down payment is less than 20% of the price of your home, you’ll need to purchase mortgage loan insurance. If you’re self-employed or have a poor credit history, you may also be required to get mortgage loan insurance, even if you have a 20% down payment. Mortgage loan insurance isn't available, if: the purchase price of the home is $1 million or more the loan does not meet the mortgage insurance company’s standards Your lender will coordinate getting mortgage loan insurance on your behalf if you need it.   Cost of mortgage loan insurance A premium is a fee you pay to get mortgage loan insurance. Mortgage loan insurance premiums range from 0.6% to 4.50% of the amount of your mortgage. Your premium will depend on the amount of your down payment. The bigger…

Understanding Your Credit Report Many people nowadays do not know how to read their credit report. Your credit report is a very significant aspect to receive credit cards, mortgages, and loans, and knowing how to read your report is important. Once you grasp the knowledge behind what kind of information is gathered, you can better prepare for your future. That's why I have included a link to help my readers better understand how to read their credit report. This document may be lengthy, but it has important information on how you can sharpen your financial skills and improve your credit score! You can download this PDF Document here

Paying Off Your Mortgage Faster Put extra money toward your mortgage To pay off your mortgage faster, consider putting extra money toward your mortgage. Your mortgage contract may allow you to: increase the amount of your regular payments make a lump-sum payment Your lender calls this a prepayment or prepayment privilege.   Increase your payments Increasing the amount of your regular payments, even by a small amount, may help you pay off your mortgage faster You may only be able to increase your payments by a certain amount each year. The amount will be written in your mortgage contract. If you increase your payments by more than your prepayment privileges allow, you may have to pay a prepayment penalty. Normally, once you decide to increase your payments, you won’t be allowed to lower them until the end of the term. The term is the period of time that your mortgage agreement is in effect, including your interest rate and terms and conditions. Check your mortgage contract or contact your mortgage lender to find out…

Renewing Your Mortgage Your renewal statement If your mortgage contract is with a federally regulated financial institution, such as a bank, the lender must provide you with a renewal statement at least 21 days before the end of the existing term. A renewal statement must contain the same type of information that is in your current mortgage contract, such as: the balance or remaining principal at the renewal date the interest rate the payment frequency the term any charges or fees that apply The renewal statement must also specify that the interest rate offered in the renewal statement won't increase until your scheduled renewal date. The financial institution may provide the statement to you as a paper document, or electronically if you consent to receive required information in electronic format. You may receive a mortgage renewal contract at the same time as a renewal statement. If your lender decides not to renew your mortgage, it must notify you at least 21 days before the end of your term.   Review…

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