A mortgage is the first loan that you will obtain to purchase your house. It can be up to the full purchase price of the home, but buyers often include some type of down payment for at least part of the price of the house. While the concept of a mortgage is simple, actually going through the process of obtaining a mortgage can be tricky. To help address some of these concerns, we provide answers to some of the most common mortgage questions below.
There is a difference between how much you can afford and how much a lender will be willing to give you. What you can afford depends on your current income and your current debt obligations.
Sit down and figure your regular expenses compared to your income to determine how much of a house payment you can afford on a monthly basis. Often, this number will be close to your current rental expense, but not always.
Lenders will generally assess your eligibility based on a finite formula. The method will vary by lender, but a good rule of thumb is that your monthly payments should not be more than 28% of your gross income. Your credit history will also have some effect on whether a lender will approve you and how much your interest rate will be.
Your mortgage includes more than just your house payment. It will often include amounts for interest, taxes, and insurance as well, but not always. This additional amount will cover all of your regular payments for your home, with the exception of utilities. You should factor these other expenses into how much mortgage you can afford.
To initiate the approval process for a mortgage, you should find a lender or bank with a favorable interest rate. You will begin by letting them know that you want to start the application process and they will request information about your finances, including information about your credit history, debts, assets, and employment.
The mortgage application and approval process can take several months. It will depend on the particular lender you use and how quickly you can provide information to them. On average, it takes between 30 and 45 days to close on a house in Iowa once the purchase agreement is signed.
Mortgages are based on a series of complicated contracts. If you are closing on your house or want to modify your mortgage, having an attorney review the contracts and make suggestions can be extremely helpful. Lawyers are also skilled negotiators who may have the extra pull you need to get your modification approved by your lender.
Jeremy Danilson can help with many aspects of Iowa mortgages. Call Danilson Law today to learn how he can be of service to you during your home buying process.