A mortgage is the largest and most significant financial event of many people’s lives. This goes for both first time homeowners and borrowers who have successfully paid off mortgages in the past. If you are ready to get the home loan mortgage that makes your ownership dreams come true, San Diego Purchase Loans is here to help!
When you get a home loan mortgage, you are getting much more than money to buy a house with. You are getting a personal space to watch your family learn and grow for many years. You are also getting a place to truly call your own, and one that facilitates many happy memories that will last you and those you love a lifetime.
When the time comes for you to get a home loan mortgage, we want to help make sure you get the proper education and planning to ensure your property ownership dreams remain a reality for many years to come. Let’s begin by discussing a house mortgage loan in a bit more detail, in order to help you understand exactly what you are agreeing to when you ink your signature on all the corresponding financial paperwork….
What is a Purchase Loan?
Simply stated, a house mortgage loan is a financial agreement in which a homebuyer receives the necessary funds to purchase a house by a lender that receives a legally binding promise of payback on those funds. A house mortgage loan is usually paid back in monthly installments consisting of interest and a principal. The house mortgage loan principal is the repayment of the original borrowed amount. The interest covers the accrued cost of borrowing that principal amount over the previous month’s time.
A mortgage payment usually also covers property taxes, as well as hazard and PMI insurance. Local governments receive property tax payments as a percentage of the property’s value. Property Mortgage Insurance (PMI) protects the lender if the borrower defaults on the loan, while hazard insurance protects both lenders and borrowers from significant property damage causing severe financial loss.
Many times, PMI is not required on a house mortgage loan when a borrower puts at least 20% down toward the home purchase. If borrowers who put 10% down remain current on their payments, PMI can usually be terminated at the midway point, or when the loan-to-value (LTV) reaches 78%. “Loan-to-Value” is what lenders use to express the ratio of the loan and the value of the asset. Borrowers can also manually request cancellation when their LTV reaches 80%.
The Lowest Home Interest Rates Possible
It is very important for borrowers to take into account the potential amount of interest accrual over the lifespan of a typical mortgage. For example:
- If you put a 10% down payment to borrow $300,000 at a 30-year fixed interest rate of 4.33%, you will end up paying approximately $213,000 in interest on top of the loan’s principal amount.
As you can see, interest accrual makes homeownership a huge financial investment, not to mention a significant (potential) liability for a long period of time for many potential homeowners!
In order to benefit from the best house mortgage loan terms and conditions, we recommend taking the following proactive steps to help tilt the mortgage application – approval process in your favor. This way you stand the best chance of getting the lowest home interest rates possible, which can save you tens of thousands of dollars over the life of a typical loan.
Now, let’s now take a look at how you can get a home mortgage loan with the lowest home interest rates possible….
How to Get a Home Mortgage Loan
If you are looking to get a home mortgage loan with the lowest possible interest rates, here are a few proactive steps you can take:
- Increase your credit score. Lenders use your credit score to gauge your financial trustworthiness. The higher your number, the lower most lenders will go with interest rates when you apply to get a home mortgage loan. Many lenders consider a credit score in the mid-700s (or higher) to be ideal for granting interest rates.
- Increase your savings. Buying a home is much more financially involved than many people might think. Ideally, lenders want to see at least six months’ worth of “in-case” payments in a borrower’s accounts. Additionally, borrowers must plan for maintenance and other costs (both immediately and periodically) mortgages do not cover.
- Consider Loan Length and Income. Of course, 15-year loans have better terms than 30-year loans. In the case of our $300,000 home example, a 15-year mortgage can save $115,000 in interest costs versus a 30-year loan. However, your loan amount might need to be less too in order to remain within your projected income/budget range.
- Know Your Home Mortgage Loan Options. There are various loan options borrowers can potentially choose from. These include FHA backed loans, VA Loans (for veterans and/or their families), as well as other lending options based on factors we discussed above like credit score, savings and income. It is important to consult a professional to learn more about the options that meet your needs based on your unique situation.
Free Home Loan Mortgage Calculator
To get a home mortgage loan with the best interest rates possible, a good rule is to find a home that costs no more than 2.5 times your annual income. We welcome you to use our home loan mortgage calculator tool in order to get a more detailed estimate based on your unique situation and needs. Our free home loan mortgage calculator will help you get a good feel for the home you can afford while staying within your financial means.
Mortgage Pre-Qualification vs Pre-Approval
Once a borrower’s basic financial foundation and plan-of-action have been attended to, it is time to begin mortgage pre- qualification. It is very important to understand mortgage pre-qualification vs pre-approval. Before the approval process takes place, a borrower must submit his or her financial portfolio to a lender. A portfolio usually includes total debt, total income and any assets (liquid or otherwise) that can potentially be levied to offset lender risk.
- The lender uses the financial portfolio information a borrower provides to give him or her an idea of the size of the mortgage he or she qualifies for
In this regard, mortgage pre-qualification vs pre-approval comes down to the depth of the lender’s research into the information you provide. The pre-qualification process gives you the opportunity to discuss your goals and needs with your lender. In turn, your lender can explain the mortgage options and terms you qualify for and that are best suited for your situation.
Since the lender has its hands on an unofficial pool of data, pre-approval is not a sure thing until the lender verifies the data you provide is factually accurate. However, prequalifying is still a smart idea because it helps give you a general idea of how much home you can afford. This way, you can focus your time and attention on houses that are within your means. To learn more about the pre-approval process for a mortgage loan, we welcome you to visit our Pre-Approval Steps page.
Your Home Mortgage Lender in San Diego
At San Diego Purchase Loans, we believe every client deserves the opportunity to realize his or her dream of homeownership. Our lending professionals are committed to providing you with the support to help you make the most informed, responsible decision. We are proud to be the home mortgage lender in San Diego first-time homebuyers and seasoned investors turn to for education, information, and the best mortgage loan options. If you would like to discuss your needs and situation with a home mortgage lender in San Diego dedicated to helping you get the terms, conditions and homeownership outcome you desire, we welcome you to contact us today!