Achieving Homeownership With a Mortgage Loan

On one hand, a house is a unique investment, helping you build equity with a home you have complete control over. On the other hand, a house is one of the most expensive purchases you will ever make – and most people don’t have the ability to buy a house upfront.

That’s where mortgage financing comes in: helping people like you achieve the dream of homeownership.

Home Mortgage Loans Put Simply

Mortgage loans come in a few different forms, which can be overwhelming at first. Let’s break down the most common terms you may see:

• Conventional Mortgage: A conventional mortgage refers to a loan that’s backed by a private lender – such as Buckeye State Credit Union.
• FHA Loan: Backed by the Federal Housing Administration (FHA), this mortgage offers lower down payment and closing cost options, but requires you to buy a home that falls within FHA loan limits.
• VA Loan: VA loans help veterans or their surviving spouses get a government-backed home loan.
• Fixed-Rate Mortgage: “Fixed rate” means that the rate on your mortgage will remain the same throughout its term.
• Adjustable-Rate Mortgage: Also known as an ARM, this mortgage changes rates on a set schedule. The rate may go up or down depending on the market rate, so your monthly mortgage payments may be higher or lower after each rate change.
• First-Time Homebuyer: If you’re buying your first house, a first-time homebuyer program can help you get a mortgage with a lower down payment and lower closing costs.

If you think you may qualify for a government-backed loan, you can check the USA.gov website for more information.

The Mortgage Loan Process

As you begin your homeownership journey, your first step should be to get a mortgage pre-approval. A pre-approval is an estimate from a lender based on your credit history and financial information. This part of the process may temporarily affect your credit score, since it typically involves a hard credit inquiry, but it allows you to shop around knowing how much house you can afford. Plus, home sellers may take your offers more seriously.

Regardless, you should do whatever you can to improve your chances of securing a mortgage. Many factors can affect your rate and terms, and even whether or not you’re approved, including:

• Your credit score. The higher your score, the lower your rate will likely be. Work on raising your score as high as possible by paying down outstanding debts and resisting the urge to open other new loans.
• Your debt-to-income ratio (DTI). If a mortgage adds too much debt to your monthly DTI, your application may be rejected. You may need different terms or to pay down existing debts before you get your home loan.
• Your down payment. The more you can save ahead of time for a down payment, the better.
• Your other savings. A mortgage loan’s closing costs can sometimes be rolled into the loan itself, but you’ll also have to worry about the cost of actually moving in. Plus, many lenders like to see that you have enough tucked away so you can continue making mortgage payments for a few months in case of job loss or other emergencies.
• The home’s value. If you’re paying a lot more for the house than an appraisal says it’s worth, your lender will be more hesitant to approve your loan.

Once you found the home and the seller has accepted your offer, it’s time to actually get your mortgage. You will need several official documents to ensure your mortgage loan application goes as smooth as possible, including but not limited to:

• Proof of employment and income
• A copy of your work visa or green card (if relevant)
• A copy of your signed sales contract
• The names, addresses and telephone numbers of all realtors, builders, insurance agents and attorneys involved
• Proof of the funds you intend to use for the down payment
• A list of your current debts and/or obligations

It sounds like a lot, but don’t worry – our lenders can help walk you through the mortgage application process.

Buying a Home in Akron, Canton, Alliance, Cleveland, or Hartville, Ohio?

When making a purchase as large and important as a new home, you’ll want a lender who understands you, your situation and the local market. Loan officers from credit unions like Buckeye State Credit Union actually work with you, getting to know you and helping you understand your options.

Plus, in addition to the personalized service and tailored lending solutions, credit unions frequently offer much lower rates than national lenders, which saves you big on interest payments.

If you’re considering your next steps towards buying a home in northeastern Ohio, we would love to help you. Start your application online or learn more about our products and services on our website today.