Sellers often prefer buyers who come with a pre-approval by a lender. This makes their offer more attractive and can help to avoid any problems that may arise down the line. If  you are looking to get a pre-approval, a mortgage broker or bank loan officers will pull your credit and submit any supporting documentation to their automated underwriting system. This allows the bank to give you more accurate loan terms based on your actual credit score, debt obligations, and income. This will also help you to get ahead […]
Example – A $200,000 fixed-rate mortgage for 30 years (360 monthly payments) at an annual interest rate of 4.5% will have a monthly payment of approximately $1,013. (Taxes, insurance and escrow are additional and not included in this figure.) The annual interest rate is broken down into a monthly rate as follows: An annual rate of, say, 4.5% divided by 12 equals a monthly interest rate of 0.375%. Every month you’ll pay 0.375% interest on the amount you actually owe on the house.
As you’re comparing quotes, ask whether any of the lenders would allow you to buy discount points, which means you’d prepay interest up front to secure a lower interest rate on your loan. How long you plan to stay in the home and whether you have money on-hand to purchase the points are two key factors in determining whether buying points makes sense. You can use this calculator to decide whether it makes sense to buy points.
To be clear, you don't need a pre-approval to start looking at houses. However, since a pre-approval is essentially the same as a full mortgage approval, just without a specific home in mind, it can be an extremely valuable shopping tool. Specifically, if you submit a pre-approval along with your offer, it tells the seller that you're a serious buyer who is not likely to run into trouble when obtaining financing. One caveat: A pre-approval and pre-qualification are two different things. A pre-qualification is based solely on information you provide and is not a commitment to lend money, therefore it doesn't carry nearly as much weight.

A few years ago (see above), if you were breathing it seemed like you could find a mortgage. Things are a little bit tighter now. The biggest factor is your debt to income ratio. It’s your minimum monthly debt divided by your monthly income. But don’t worry. You don’t have to do the math! There’s a handy DTI calculator that will figure it out for you and estimate how much you’re likely to qualify for.
LendingTree, LLC is a Marketing Lead Generator and is a Duly Licensed Mortgage Broker, as required by law, with its main office located at 11115 Rushmore Dr., Charlotte, NC 28277, Telephone Number 866-501-2397 (TDD/TTY). NMLS Unique Identifier #1136. LendingTree, LLC is known as LT Technologies in lieu of true name LendingTree, LLC in NY. LendingTree technology and processes are patented under U.S. Patent Nos. 6,385,594 and 6,611,816 and licensed under U.S. Patent Nos. 5,995,947 and 5,758,328. © 2016 LendingTree, LLC. All Rights Reserved. This site is directed at, and made available to, persons in the continental U.S., Alaska and Hawaii only.

If you are thinking about buying a home in the near future, before you start house hunting or get pre-approved for a loan, it’s a good idea to check your credit report and find out what your credit score is. You are entitled to a free credit report once a year from each of the three credit bureaus – Equifax, TransUnion, and Experian, which you can access at www.annualcreditreport.com.
• Be ready to move fast. A well-located house in good condition and priced right will sell quickly; it can even be the first day it goes on the market. A buyer needs to be ready to commit if they find a home they like because they risk the chance of losing it if they don’t. One of the things First Ohio Home Finance is known for is how quickly they work for their customers.

You should know where your credit score stands before you start looking for a home or begin the mortgage process. Even if you think you have perfect credit, there may be issues or mistakes on your credit report that you are not aware of. A mistake on your credit report can seriously cost you in the long run. If your credit is less than perfect, you can work to build up your credit and hold off on buying a home until your credit has improved, or you can apply for an FHA loan. FHA-insured loans are less risky for lenders, allowing them to offer more lenient qualification standards. Because FHA loan programs offer easier qualifying guidelines than many other loan types, they can be a good option for borrowers who have poor credit.


Interest – This is what you are paying to borrow the money for your home. It is calculated based on the interest rate, how much principal is outstanding and the time period during which you are paying it back. At the beginning of the loan repayment period, most of your payment actually is going toward interest, with a small portion going against paying down the principal. Over time this will reverse and more of your payment will go toward reducing the loan balance.
Amortization. Each mortgage payment is split so that part goes to paying the principal and the rest goes to interest. In the early years of your mortgage, interest makes up a greater part of your overall payment, but as time goes on, the principal becomes a larger portion because you have a smaller amount of principal to charge interest against. Your lender will provide an amortization schedule (a table showing the breakdown of each payment).

FHA Special Forbearance: If you are having difficulty making mortgage payments because you are unemployed and have no other sources of income, you may be eligible for FHA's Special Forbearance. FHA now requires servicers to extend the forbearance period, by offering a reduced or suspended mortgage payment for up to twelve months, for FHA borrowers who qualify for the program.

“Get pre-approved early, and know your numbers. Make sure you understand the monthly payment that goes along with your price point. Your expectations and your reality need to sync up. Also, rely on your professionals like loan officers and real estate agents. Never feel like you’re bugging them with questions, they should want you to bug them with questions. They’d certainly rather you get the correct info from them than the incorrect info from Google. Also, I think it’s ok to overpay a little for a house you love. If the market isn’t giving you many options to buy and you find a house you love, don’t get hung up on a couple thousand bucks, especially if you’re going to stay in the house long-term. If you can afford it, make it happen.”–Tyler Baker, Branch Manager, Olathe, KS


Short sale can be an alternative to a foreclosure, and it will allow you to sell your home for less than the current outstanding mortgage balance on it. While this can be a drawn out process and take time, this option is becoming more common and acceptable by banks, real estate agents and servicers. Learn more on how short sales can stop foreclosures.

Once you’ve been keeping regular tabs on your credit report, you’ll be able to see how you’re doing. Dispute any inaccuracies with the 3 credit bureaus and get everything cleared up. If your debt-to-credit ratio is too high, monitoring your score over time will show you how your score might change. If you see accounts that you didn’t open or addresses that aren’t yours, take immediate steps to investigate what could be identity fraud.

You should know where your credit score stands before you start looking for a home or begin the mortgage process. Even if you think you have perfect credit, there may be issues or mistakes on your credit report that you are not aware of. A mistake on your credit report can seriously cost you in the long run. If your credit is less than perfect, you can work to build up your credit and hold off on buying a home until your credit has improved, or you can apply for an FHA loan. FHA-insured loans are less risky for lenders, allowing them to offer more lenient qualification standards. Because FHA loan programs offer easier qualifying guidelines than many other loan types, they can be a good option for borrowers who have poor credit.
The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

Yes, Keep Your Home California will continue to pay Unemployment Mortgage Assistance benefits to a homeowner’s servicer even if the homeowner exhausts their California Employment Development Department benefits, and remain not fully employed, during the time of Unemployment Mortgage Assistance. Keep Your Home California will stop benefit payments if the homeowner becomes fully re-employed or if it determines that the home is listed for sale, the homeowner is renting or no longer occupying the property, or the homeowner is actively negotiating a Short Sale or Deed in Lieu of foreclosure with their Servicer.
Conforming loan. Fannie Mae and Freddie Mac are government-controlled corporations that purchase and sell mortgage-backed securities. Conforming loans meet their underwriting guidelines and fall within their maximum size limits. For a single-family home, the loan limit is currently $424,100 for homes in the contiguous states, the District of Columbia and Puerto Rico, or $636,150 for homes in Alaska, Guam, Hawaii and the U.S. Virgin Islands. However, in certain high-cost counties, loans limits can go as high as $954,225.

If you have a credit card with a $20,000 limit, that doesn't necessarily mean that you should spend $20,000 on purchases with the card. The same logic is true when it comes to mortgages -- just because you can qualify for a certain mortgage amount doesn't mean that you have to max out your budget. Be sure that your new mortgage payment not only fits your bank's standards but your budget as well.


Following the financial crash of 2008 and the subsequent collapse of the housing bubble, many (but not all) real estate markets eventually recovered. Entered into in a prudent way, home ownership remains something you should consider in your long-term financial planning. Understanding how mortgages and their interest rates work is the best way to ensure that you're building that asset in the most financially beneficial way. 
Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.
There are cases where your mortgage can factor into your other financial plans, making them more or less attainable. For example, Charlie Donaldson, MBA, College Funding Advisor at College Bound Coaching, says, “The amount of your home equity can count against you when attempting to get financial aid to pay for your child’s college education, potentially costing you tens of thousands of dollars each year your child is in college.”
Mortgage principal reductions are becoming more common. The latest data shows that banks and lenders are forgiven, deferring or reducing the principal balance on about 15% of home mortgages, and they are writing off billions of dollars in principal. Studies show that reducing the balance on a mortgage may be the most effective solution to a housing crisis. Locate a list of mortgage loan principal reduction programs from banks.
Amortization is what you are actually paying per year against your loan. You can get a mortgage with a term of 10, 15 or 30 years. You pay each month and the principal decreases until it’s paid off. The payments don’t change but at the beginning of the term, most of the payment is going toward interest. By the end of the term, that’s flipped and you’ll be paying down the mortgage principal.

If you can afford the higher payments, or are willing to buy a less expensive home, a 15-year mortgage can save you thousands of dollars in interest and can allow you to own your home free and clear in half the time. Fifteen-year interest rates are about one percentage point lower than 30-year rates, and you might be surprised how much the combination of a lower rate and shorter amortization period can save you.


Homeowners are encouraged to explore free HUD foreclosure prevention counseling, which could help you qualify for other programs. Homeowners should also contact their servicer to find out if they qualify for a loan modification or other foreclosure prevention options. Some of these may include transition to other foreclosure alternatives, such as deed-in-lieu of foreclosure or short sale.


In addition to a down payment, you will also have to pay closing costs to finalize your loan. This can be a substantial amount of money, so it’s important to plan ahead and be aware of the amount you will likely have to bring to the table. Make sure you have budgeted and saved up enough for these fees in advance, so they don’t catch you by surprise.
Note that the Hope for Homeowners program indicated above has been expanded. Families can now receive aid on a second mortgage, and more lenders are participating and cooperating with the FHA. Banks and lenders have been provided further incentive to participate in the program. Find how the FHA Expanded Hope for Homeowners to assist more borrowers.
×