If you’re a first-time homebuyer, you may find yourself in need of a mortgage loan. Over 60 percent of homeowners have a mortgage, so becoming familiar with the loan process can be beneficial to your homebuying journey.
What is a mortgage?
A mortgage is a legal agreement between a borrower and a lender where the borrower, once approved for a set amount, pays back the lender over a specified term.
Most mortgage loan terms range from 10 to 30 years, with the 30-year term being the most popular as it often comes with lower monthly payments. However, it’s good to note, the longer you take to pay off the loan, the more money you’ll pay in interest over the lifespan of the loan.
Get ready for preapproval
Getting preapproved for a mortgage loan is a great first step, as it allows you to see if you qualify. It also can give you a good idea of the financing you’ll have to work with to purchase a home. During the preapproval process, your lender will collect your financial information to see if you meet their borrowing requirements.
You’ll most likely will need to provide W-2s, tax return info, your credit score and a few other items for preapproval verification.
What is a mortgage composed of?
A mortgage loan is made up of 4 primary components that include the principal, tax, insurance and interest.
The principal amount is the amount of funds still left to pay off the loan, whereas interest is the fee your lender charges for taking out their loan.
Your mortgage provider may also collect property taxes on your behalf through your monthly mortgage payment to be used annually. If you put down less than 20 percent on your home’s down payment, your loan provider may require you to pay for mortgage insurance to protect them if you default on the loan.
Owning a home and paying for a mortgage is a significant commitment, so consider speaking with a lending officer. They can help you explore your options, get a better understanding of the process and find the right loan for your next home purchase.
About the Author
Audrey L. D. Petschek
Hi, I'm Audrey L. D. Petschek , Broker, owner of Blue Horse Realty, LLC and I'd love to assist you!
I have over 20 years of experience, sales over 100 Million dollars and accolades in the Industry including:
"Best of the Best",
Top 1% out of 62,000 Agents Internationally,
8 xs Agent of the Month in a single year,
International President's Elite. (Top percentile for producers)
In addition, I have been named
10 BEST Real Estate Agent in Connecticut for Client Satisfaction for 2018, 2019, 2020.
I offer Blue Ribbon Service to all my clients!
I cover all of Fairfield County and into Litchfield and New Haven Counties and travel further for Equestrian properties and land acquisitions.
20 years on the Greenwich Board of Realtors, I also hold higher designations:
Certified Residential Specialist , CRS,
Accredited Buyer Representative, ABR,
Seller Representative Specialist, SRS,
Graduate of the Realtor Institute, GRI and
CHP, Certified Home Specialist.
Let me put my expertise and Blue Ribbon Service to work for you!
