What is required to apply for a mortgage?
When applying for a mortgage loan at AbbyBank, we look at two years’ worth of work history, applicant credit scores, borrower assets, and we will ask for a valid ID. Typically, a 660 credit score or higher is recommended when purchasing a home. There are many documents needed when applying for a home loan that you will want to start gathering for the lender.
Is it better to get a mortgage loan from a bank or mortgage broker?
Although mortgage brokers tend to have access to more mortgage loan types, they typically have higher interest rates associated with their loans which can impact your monthly principal and interest payments. There also can be additional loan fees when doing business with brokers that you would not have with a traditional community bank.
One major benefit of working with AbbyBank is the ability to communicate directly to your mortgage lender without a go-between. Our mortgage lenders will give you their contact information and can answer any questions throughout the home financing journey and for the life of the loan. Mortgage Brokers sell the servicing of your mortgage loan, so your point of contact can change more than once throughout the life of the loan.
How much house can I afford?
We will work with you to determine your Debt-to-Income ratio (DTI). Your DTI will help determine how much down payment you might need and how much home you can comfortably afford. A healthy DTI to aim for is under 43%. However, you can still get a loan if it is higher than that. You can calculate DTI by adding up your current monthly debt payments and divide them by your gross monthly income.
Why should I get a preapproval or a prequalification for a home loan?
Getting a preapproval for a home loan allows you to know how much home you can afford. This can help give you an estimate on what your monthly payments could look like. In a Sellers’ market, this offers you some negotiation power. A seller is more likely to negotiate with a prospective buyer who has a preapproval letter over someone who doesn’t. The seller wants to feel secure knowing you can obtain home loan financing.
Realtors also appreciate seeing the letter before showing you a home as it helps them know you are a qualified buyer and empowers them to find homes in your qualified purchase price range.