When purchasing a home in Jacksonville, FL, one of the first things potential homebuyers should do is get pre-approved for a mortgage. By getting pre-approved, buyers can find out the maximum amount they can borrow and demonstrate they’re serious about purchasing a home.
To help make the mortgage approval process go as smooth as possible, we reveal a few essentials an applicant should know before starting to look for a mortgage in Jacksonville, FL.
How a Mortgage Works
A mortgage is made up of two main components: the principal, which is the actual amount borrowed from the lender, and interest. With most conventional mortgages, borrowers must make regular monthly payments over 15 or 30 years.
While a large portion of each mortgage payment is dedicated to the interest in the first few years, the payments in the final years are primarily made toward the principal.
Additionally, first-time homebuyers could benefit from series of special grants and mortgage programs. When shopping for a mortgage in Jacksonville, FL, homebuyers should review all the programs available and ponder their options carefully.
Things That Could Ruin the Chance of Getting a Mortgage in Jacksonville, FL
In addition to developing good credit habits before shopping for a mortgage, an applicant should avoid some common mistakes, such as:
- Applying for another loan or making major purchases – After signing the loan agreement and setting the closing date, a homebuyer may be tempted to purchase new furniture and appliances, or make a down payment on a new car.But all these can negatively impact credit scores and lead a lender to reject a mortgage application, even if the closing date is just around the corner. Since lenders run a second credit check and review debt-to-income ratio before funding loans, they can deny a mortgage one or two days before closing.
- Closing or opening accounts – Closing or opening new accounts can have a negative impact on the debt-to-credit ratio, lowering the credit score of applicants along with their chances of getting a mortgage.
- Falling behind on bills and other loan payments – Missing bill payment deadlines is another factor that can hurt the credit score of a mortgage applicant. Just one check submitted after the due date can knock a few points off the credit score.Additionally, a lender might have doubts about the applicant’s ability to handle the money responsibly and make payments on time. As a result, the lender might offer a higher interest rate, or worse, reject the application.
- Switching jobs – Since lenders also reassess the stability of employment and amount of income before issuing a mortgage in Jacksonville, FL, switching jobs just before the closing might prevent an applicant from getting a mortgage.
Considering All the Costs
A would-be homeowner needs to make sure that he or she has enough money to cover all the costs associated with buying a house.
Another critical aspect is that although some mortgage products require a down payment as low as 3.5%, the bigger the down payment, the lower the interest rate and monthly payment will be. Plus, a borrower who makes a 20-percent down payment doesn’t have to pay PMI.
Buying a home in Jacksonville, FL, isn’t only an exciting moment in someone’s life; it’s also an important decision. If a homebuyer cannot purchase a home without a mortgage, the tips above can help him or her find the right financing alternatives and have an enjoyable home-buying experience.