Banks, credit unions and mortgage bankers make home loans; mortgage brokers process them. The lender will take an application, process the loan documents, and see the loan through to the funding stage.
If you have less than perfect credit, talk to your lender.
A lender should be able to advise you on whether your credit history will prevent you from qualifying for a home loan.
You will need a down payment.
Down payment requirements vary depending on the type of loan. However, down payment assistance programs are available for First time buyers. These programs may loan or grant you the funds necessary for the down payment.
Funds for closing costs.
Closing costs are charges for services related to the closing of your real estate transaction. They include, but are not limited to:
- Escrow fees charged by the company handling the transaction
- Title policy issuance fees charged by the title insurance company
- Mortgage insurance fees
- Fire and homeowners insurance
- County Recorder fees for recording your deed
- Loan origination fees
Some loans have “points” and some do not.
A point is a loan origination fee equivalent to 1% of the loan amount. Together with the interest rate they constitute the yield on your loan for the lender. Some lenders charge a higher interest rate to compensate for charging no points. It is important to comparison shop lenders to make sure your loan is at a competitive yield.
Be aware of the two main types of loan categories:
- Conventional Loans. Conventional mortgage loans are available with fixed or adjustable interest rates. Some loans may require mortgage insurance.
- Government Loans. These include Federal Housing Administration (FHA) fixed and adjustable rate mortgage loans, and Veterans Administration (VA) fixed rate mortgage loan, USDA (United State Department of Agriculture).
Always keep in mind that buying a house is the best deal investment you can make!