Buying a home is one of the most important investments of your life. You will watch your family grow up in the home, celebrate special occasions, and have a lifetime of memories in that house. Because buying a home is such a large and long-term investment, you want to make sure that you are fully aware of the steps you will take, the documentation you need for your home lender, and be able to decide which type of mortgage is right for you (adjustable or fixed rate mortgage; 10 year, 20 year, 30 year mortgage).
At White River Credit Union in Enumclaw, we understand the importance of getting a home loan and how exciting (but also stressful) the process can be. We want to make sure our members feel comfortable with and understand the entire process so a part of our services is to give you as much information as you need to make the best choice for you and your family.
How to Get a Home Loan
Once you have begun looking for the home of your dreams (and perhaps found it), it is time to begin the process of getting a mortgage from a home lender. One of the most important pieces of information you will need when approaching home lenders is your credit score. The higher your score the better you will look in the eyes of a financial institution – you are less of a risk. The mid-700s is a solid score.
You also need to know what you can afford before you even start looking for a home. Don’t forget that you will be paying interest on the loan in addition to the monthly payment amount. This information will also help you choose which loan is the best option for you: adjustable or fixed rate mortgage; 10, 15, 20, 30 year mortgage; etc.
Getting pre-approval for a mortgage is also a great idea when it comes to showing the seller that you are serious. It also lets you know just how much a financial institution is willing to lend you based on your credit, employment history, and earnings.
Documents You Will Need
While everyone’s financial situation is unique to them, there are several documents all mortgage home lenders will need you to bring when you are applying for the loan. You should have the following ready:
- Tax returns so that mortgage lenders can get the full story of your financial situation and history
- Pay stubs, W-2, and other proofs of income
- Bank statement and information on all other assets
- Credit history
- Gift letters documenting any financial gifts your friends or family may be giving you to help obtain and pay for the loan
- Photo ID, such as a driver’s license
- Renting history if you do not already have home ownership history
Once you have all of these documents ready, you are set to meet with your mortgage home lender.
Choose the Right Home Loan
When it comes to choosing the right home loan for your individual situation, it may seem a bit overwhelming at first. There are many types and lots of options to pick through. At White River Credit Union, we are here to help you figure out which type is right for you.
There are some basic loan types which are not insured by a government agency, government-insured loads, and different loan repayment options. Our experienced home loan experts will discuss all of your options and help you make a decision.
Fixed-Rate Loans
If you choose a fixed-rate loan, that means you are locking in your interest rate for the entire life of the loan no matter how the interest rate market changes over time. These provide you long-term predictability so you always know how much your mortgage payment will be each month. These can be anywhere from a 30 year mortgage (small payments but more accrued interest) to 20 year mortgages and all the way down to 10 year mortgages (higher payments but shorter timeframe).
Adjustable-Rate Mortgages
With an adjustable-rate mortgage, your interest rate may increase or decrease over time. Typically, they will stay the same over the course of 5-10 years and then adjust annually. This is a great option for those who know they will be moving before the life of the loan is up or have a career which can easily cover adjustable payments. It is also good for those refinancing and those looking to sell their home in the future.
Contact Our Home Loan Experts
If you are looking to buy a home and want to discuss your options with an experienced loan experts, contact White River Credit Union. We understand all the ins and out of the home buying experience and can help you decide which options are best for you. Our goal is to see our members satisfied with their loan options.
Photo by Taylor Simpson on Unsplash
