Buying a home is a big step, and we know the mortgage process can bring a lot of questions. How much do you need for a down payment? What’s the difference between pre-approval and pre-qualification? To clear up the confusion, we sat down with our mortgage lending specialist, Johnny, to tackle the five most common mortgage questions.
Watch the full video above or read the info from the video below to get all the details!
1. What's the first step to getting a mortgage?
So, the first step is really just understanding the big picture, your financial situation. That means looking at your credit, knowing where you stand with your income, and getting a handle on your finances overall. It’s about understanding your financial position before you start the mortgage process.
2. How much does a home buyer typically need for a down payment?
Here at Radiant, we typically see as little as 5% down, but it really depends on the loan type and the home price. So, if you’re buying a $200,000 home, that’s $10,000, which might be a stretch for some people. The good news is, there are options. There are down payment assistance programs that can help, so there are ways to make it work.
3. What's the difference between pre-approval and pre-qualification?
Pre-qualification is more of an educated guess. You’re telling me what your credit looks like, what your income is, and what your debts are, but I don’t have any proof of it. A pre-approval is much more solid because we verify everything. We verify your credit and we typically dig a little bit deeper as far as income and then as far as assets go as well.
4. How do interest rates impact monthly mortgage payments?
They’re linked directly. The smallest change in interest rates, whether it goes up or down, will make a difference in your monthly payment. It might not seem like a big deal if your payment changes by just a few dollars, but over the life of a loan 15, 20, or 30 years, that really adds up.
5. What credit score do buyers typically need to qualify for a mortgage?
On paper, the minimum is usually around 640. But honestly, credit scores go hand in hand with the full financial picture. A lower score can make things harder, but it depends on why the score is low. Do you have a lot of credit card debt? Are there late payments?
On the flip side, I’ve seen people with high credit scores who are overextended financially. So, I don’t like to throw out a single number because every situation is unique. That’s why it’s best to look at the full credit report rather than just focusing on a score.
When you're ready, let's get started.
At Radiant Credit Union, we’re here to guide you every step of the way and our team is ready to help you navigate your mortgage options with ease.
Have more questions? We’ve got answers. Visit our website, stop by a branch, or reach out to one of our mortgage experts today. Your dream home is closer than you think!