Without knowing your budget, it can be challenging to look for a home. With a mortgage preapproval, you can shop wiser and make more persuasive offers. At Dovetail Mortgage, a mortgage broker in Massachusetts, we have created a simple three step process you can follow to get pre-approved for a mortgage in Massachusetts.
Step One: Understand Interest Rates, Loan Terms, and Mortgage Types in Massachusetts
Generally speaking there are two types of interest rates for homebuyers. A fixed mortgage rate or an adjustable rate mortgage known as a ARM.
A fixed mortgage rate have fixed interest rates that remain the same for the duration of the loan.
ARMS have have variable rates, which means they fluctuate over the course of the loan. For instance, a 5/2 ARM means the interest rate is fixed for 5 years before changing after that every 2 years.
A loan term refers to how long you have to pay off your mortgage loan. The most common types of loan terms are 15, 20, and 30 year mortgage loan terms.
The type of mortgage you receive depends on your individual situation. There are many different types of mortgages and you should always speak with a mortgage broker first before deciding, but some common ones include:
Conventional Loans –
Conventional mortgages typically have fixed terms and rates and are not insured or guaranteed by any government body.
FHA Loans –
The Federal Housing Administration insures FHA loans, which are mortgages that are provided by the Department of Housing and Urban Development. You must pay mortgage insurance if you choose an FHA loan, which guards the lender from financial loss in the event that the borrower defaults on the loan.
Special Mortgage Loans
Jumbo loans, USDA loans, and VA loans are a few examples of special mortgage loans. The majority of special loan programs are strict, and you may need to meet criteria like veteran status or income levels.
Step Two: Understand How Much You Can/Should Spend
To find out how much you can borrow when buying a home, get in touch with a local mortgage broker. The amount you can borrow depends on your income, ongoing commitments, down payment, and credit history. Our team of dedicated loan experts can answer any questions you may have regarding residential financing, whether you’re a first time home buyer, looking to refinance, or shopping for a second home. We are here to assist you.
Step 3: Get Your Prequalification Letter and Start Your Real Estate Hunt!
Once you have been approved for a mortgage you will receive a prequalification letter from the bank, credit union, mortgage lender, or mortgage broker outlining the maximum loan amount you are eligible to take out. Prequalification for a mortgage loan does not require a property with a specific address.
Knowing how much you are qualified to borrow can help you shop for a home with less stress after receiving your prequalification letter. The enjoyable part of the process is looking for potential new homes. You can find a lot of websites to help you with your home search, such as Realtor and Zillow.