Aside from your credit score and credit history, mortgage lenders will also determine your “ability to repay” through your debt-to-income ratio or DTI ratio. It’s the part of your monthly gross income that you use to repay monthly debts. As someone planning to take out a mortgage, you need to understand DTI to figure out if you need to improve it to increase your chances of getting a lender approval.
Expressing an “intent to proceed” is another critical step in the home buying process that you need to decide after shopping and getting pre-approved by a few mortgage lenders. In simple terms, intending to proceed means that you’ve finally chosen a lender who you think offers you the most competitive rates. As a first-time homebuyer, there are things that you need to understand if you plan to proceed with your application with a particular lender because this will be the first time a lender will start charging you fees, other than a credit report fee.
The number of Generation Z homebuyers are expected to grow in the next couple of years. As the youngest credit-eligible generation planning to buy a home, you should be aware of the industry-specific acronyms that you’ll encounter which may appear to be very technical. It’s critical that you know and understand the common mortgage acronyms by heart to avoid costly mistakes and help you get the best deal.
A loan estimate is an important document that would-be homebuyers receive when applying for a mortgage. In general, the three-page document estimates everything that a homebuyer needs to pay for the entire loan. While loan estimates are designed to help homebuyers better understand the mortgage loan terms, there are some instances when the final Loan Estimate may be higher than what was originally quoted.
It’s normal for first-time homebuyers to feel overwhelmed by the process of becoming a homeowner. First-time homebuyers are often excited in the thought of making one of the biggest investments in their lives. Along with this, they also need to make solid financial decisions to determine if they can sustain living in the house they are choosing.
Shopping for a mortgage and home is the first step you need to take if you want to fulfill your dream as a homeowner. Buying a home is often overwhelming simply because you’re making one of the biggest financial decisions in your life. Before applying, it’s smart to educate yourself on the mortgage process and programs so that you can better understand your options.