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?
The first step is gaining a clear understanding of your financial situation. That includes reviewing your credit, knowing your income, and getting a grasp on your overall finances. Ensuring that a strong financial position before you start the mortgage process will help set you up for success.
2. How much does a home buyer typically need for a down payment?
At Radiant, we typically see down payments as low as 5% down, but it depends on the loan type and the home price. For example, if you’re buying a $200,000 home, 5% down would be $10,000, which might be a challenge for some buyers. The good news is that there are down payment assistance programs that can help.
3. What's the difference between pre-approval and pre-qualification?
Pre-qualification is an educated guess based on the financial information you provide, such as your credit, income, and debts. However, it is not verified. Pre-approval is a more thorough process where we verify your credit, giving a more reliable indication of your home-buying budget. We also typically dig a little bit deeper as far as income and assets as well.
4. How do interest rates impact monthly mortgage payments?
Interest rates and monthly mortgage payments are linked. The smallest change in interest rates, whether it goes up or down, will make a difference in your monthly payment. While a slight increase or decrease may only change your payment by a few dollars each month, over a 15-, 20-, or 30-year loan term, those differences add up significantly.
5. What credit score do buyers typically need to qualify for a mortgage?
On paper, the minimum is usually around 640. However, credit scores go hand in hand with the full financial picture. Lenders also consider factors like credit history, debt, and financial stability. A lower credit score may present challenges, but the reasons behind it matter just as much. Likewise, a high score doesn’t always guarantee financial readiness if there’s too much debt involved. That’s why it's best to look at the full picture rather than focusing on just 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!