When It’s Right to Wait on a Mortgage

couple talking with loan officer

Buying a home is a great option for many people, and if you’re looking to be a first time home buyer, we have numerous mortgage options available for you at Altius Mortgage and our partners at Mortgage Ogden. Whatever your income range and desired amenities, we’re here to help.

There are also many challenges to would-be buyers, and in some cases, these challenges might actually dictate that waiting a bit on a mortgage is the right idea. Here are a few signs that a mortgage is wrong for you, and that waiting might be prudent.

Ugly Credit

You don’t need perfect credit for a home loan, and in many cases, you barely even need good credit to get approved and find decent mortgage rates. But anyone with a credit score well under 600 could have trouble securing certain kinds of financing, and it’s important to take charge of your credit before you try to finance a home. You can use free sites to pull your credit report for free, then hunt for any discrepancies. In addition, take steps to improve your creditworthiness over time.

Income Instability

Lenders want to minimize their risk, and a solid employment situation can go a long way here as you apply. On the flip side, a less stable situation can cause trouble – if you’ve been on a job less than a year, you’re self-employed, you’ve recently changed fields or have a long gap in employment, these could be causes for concern to a lender.

Limited Savings

Once again, you don’t need a perfect situation here to qualify for many good mortgage situations. But you’ll need at least some cash in the bank for things like a down payment, earnest money deposit, appraisal, inspection, closing costs and more. Many conventional loans require a 5 percent down payment, and inspections and appraisals will be several hundred dollars.

Still “Seasoning”

“Seasoning” is an industry term for the period following a bankruptcy or foreclosure, a period during which credit scores often take a major hit. Buyers will often need to spend a few years rebuilding their scores and finances before they can consider a mortgage.

Want to learn more about mortgage factors like these? The brokers at Altius Mortgage are standing by.

Important Mortgage Terms to Know

ball of words

Buying a home can be a complex process, and for many people, it’s the largest transaction they’ll ever complete. It’s important to know the details of what you’re getting into, and at Altius Mortgage and our partners at Mortgage Ogden, we’re here to help with these.

One part of this is understanding numerous terms that might come up while you look for mortgage loans. Here are some of the key terms to know, with simple definitions.

Appraisal

Appraisal is a process to tell you exactly how much the home is worth. It will tell you how much to offer on a home, and will help determine how much a lender is willing to lend.

APR

APR is short for Annual Percentage Rate, which is simply the rate of interest that will be applied to your home for the entire year. Remember that this is not a monthly mortgage rate, but a yearly one.

Balloon Payment

A balloon payment refers to the balance of the loan that will be due at the end of the term. Many interest-only loans have balloon payments, and construction loans do as well. By the time this payment is due, you must either have paid it in full or refinanced the loan.

Collateral

Collateral is what the bank can collect if you default on the loan. In a mortgage, the collateral is the home itself.

Down Payment

Down payment is the amount you pay to the home out of pocket. It’s generally between 10 and 20 percent of the home’s value, but you can qualify for a much lower one in some cases.

Foreclosure

Foreclosure is the process the bank goes through when someone stops paying on a home mortgage. The bank takes the home back, and requires the borrower moves out.

Principal

Principal is the original borrowing amount, while interest collects on top of this.

Private Mortgage Insurance

If you aren’t able to put up the requisite down payment, some lenders require you take private mortgage insurance to protect them from risk. This is not the same as homeowner’s insurance, which protects you.

Short Sale

A short sale is when you try to sell the home for less than you owe on the mortgage. The lender will agree, and may either forgive the remaining balance or ask you to pay on the difference.

Term

The term simply refers to the length of the loan, which can range from 10 years to 30 years.

Want to learn more mortgage terms, or interested in any of our programs? The brokers at Altius Mortgage are here to help.