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There are many types of loans that require different down payments. A bigger down payment might mean a lower interest rate and better loan terms. If you do not put 20 percent down, you will have mortgage insurance that will raise your monthly payments.
There are many factors that play into getting approved. Income, employment status, assets and credit history are just a few of the factors. With different loans mean different guidelines. Types of loans include VA, USDA, FHA, Home Possible and Conventional.
Closing costs consist of services provided by the lender and other parties, title companies and insurance companies. The lender is required to send out a loan estimate stating all fees that will be included in the loan.
There has to be a signed contract by both parties in order to lock in a rate. Typically, 60 day locks are as far out as you can go.
In most cases you will need tax returns from the previous two years, a W2 from the previous two years, most recent bank statements from the previous 2 months and most current pay stub (a full month’s worth).
The loan estimate will break down the interest rates and fees. It will include the annual percentage rate (APR) which accounts for the interest rate, points, fees and other charges you will pay for the mortgage. Interest rates fluctuate every day.
Lenders might charge discount points, which reduce the interest rate. Make sure to check if they are charging you or not. You also have the option to buy down the rate, which in some cases it is beneficial.
Typically it takes 30-45 days to close on the loan. This process might have some delays if you’re doing a government loan and it’s a busy season.
If you change jobs or your pay changes, it could delay the loan. If you acquire any new debt since you started the process or have a change in credit history, it could create obstacles in closing the loan.
Most lenders do not require a pre-payment penalty, and you can make as many payments as you would like. Make sure to check if there is a penalty.