You can get your scores through MyFICO. You’ll pay a small fee for them — they’re not free like the credit reports are. But you need to know this information. The last time I ordered my scores through the FICO website, I paid around $15 for each one (TransUnion and Equifax). You can no longer get your Experian score through MyFICO. I think the two companies had a falling out. But two out of the three scores is enough to know where you stand.
If you know for certain you’ll be selling the home a few years down the road, you might want to consider the ARM loan
The lender uses your FICO score when deciding whether or not to approve your loan application. They also use it to assign an interest rate to your loan. You can get all three of your credit reports for free by using AnnualCreditReport. You can get your scores through MyFICO for a small fee.
The next step in the application process is to choose a type of mortgage loan. You should choose a loan that suits your long-term plans. Here’s how to go about it.
This article explains how to apply for a mortgage. Applying for the loan is actually quite simple. You just fill out the application and provide whatever documents the lender requests. But you also want to apply for the right kind of mortgage loan — the type of loan that meets your needs now and well into the future.
You have a few choices to make. First, you need to decide if you want to use a conventional mortgage loan, or a government-backed loan. Here’s the difference:
Summary: You need to review your credit situation before you apply for a mortgage loan
- Conventional mortgage loan are offered by lenders in the private sector, with no government backing of any kind.
- Government-backed loans are also made by lenders in the private sector, but they are insured by some agency of the federal government. The government insures the lender against losses from the borrower defaulting. FHA loans and VA loans are two popular examples.
A lot of first-time home online payday loans in GA buyers use the FHA loan, because it allows you to make a smaller down payment. It’s also easier to get approved for a FHA loan. But you’ll pay a premium for these benefits, in the form of mortgage insurance. If you use a conventional loan with a down payment of 20 percent, you can avoid paying mortgage insurance.
You also need to figure out if you want to apply for a fixed-rate mortgage, or one with an adjustable rate of interest. Here again, there are certain pros and cons to each option.
Summary: You need to review your credit situation before you apply for a mortgage loan
- The fixed-rate mortgage (FRM) carries the same interest rate for the entire life of the loan. So your payments will stay the same as well, even if the loan has a 30-year term.
- The adjustable-rate mortgage (ARM) has an interest rate that changes over time. In the case of a hybrid ARM loan, the rate will remain fixed for the first few years. Then it will start adjusting after that. You might enjoy a lower rate during the fixed period. But you’ll also face the uncertainty of a fluctuating rate that could increase your monthly payment.
How do you apply for the right type of mortgage loan? You do this by thinking about your long-term plans. If you think you’ll be in the home for a long time, the fixed-rate loan is your safest option.
Summary: This article explains how to apply for a mortgage loan in step-by-step fashion. But it’s equally important to choose the right type of loan. Your two biggest choices will be (A) conventional versus government-backed mortgages, and (B) fixed versus adjustable-rate loans. Think about your long-term plans, and choose the loan that best supports your situation. Use the links provided above to learn more about the pros and cons.