Don’t Let the “Lender Lingo” Deter You
Buying and financing a home for the first time can be a bit intimidating. Mortgage lenders certainly have their fair share of “lender lingo” that seems foreign to most. Debt ratios, loan conditions, amortization, annual percentage rate…why all the jargon? Lenders aren’t the only industry with their own trade talk, but when it comes to qualifying for a mortgage it can keep some potential homeowners in the dark when they don’t have to be. So how do you start? How do you know the steps for getting your first mortgage and owning your very own home? Simple, the first thing you do is pick up the phone and get prequalified. It’s easy, it takes maybe about 10 minutes and it will tell you what your home finance options are. Let this Colorado Springs realtor quickly review the process with you.
What is the prequalification process?
Mortgage loan officers have several different mortgage programs available; each loan program has their own unique set of guidelines. After speaking with a loan officer, you’ll be provided with different choices as well as indications to which program is best for you.
What does the loan officer want to know?
You’ll be asked about your gross monthly income and the nature of your employment. You’ll typically need at least two years of steady income with the likelihood the income will continue in the future. This simply means, “Where do you work, how long have you been there and how much do you make each month before taxes?”
The next thing the loan officer wants to know concerns current monthly debt. This doesn’t’t include your current rent, cell phone or electricity bill, but credit accounts for things such as monthly credit card payments, student loans, credit lines, and a car payment.
Once income and debt are established, “How much money do you have available for a down payment (if required)?” This question will help determine which loan program is best for you and if you qualify for any of the grants or down payment assistance programs that are available.
Keep in mind a prequalification conversation will also talk about your current credit profile but does not always require pulling a credit report.
With this information the loan officer will use prevailing mortgage rates and craft a qualifying loan amount based upon what you told the loan officer.
The Map to Homeownership
A conversation with a loan officer tells you where you stand today and how to get where you want to go. Based upon your gross monthly income, current debts and interest rates, you’ll know how much you can borrow. If there are any credit concerns when the loan officer reviews your credit report, they will alert you of the issues that need to be fixed and they will be pointed out. In essence, you’re provided with a road map that will lead you to your first home.
But why the hesitation? Getting a prequalification from a loan officer costs you absolutely nothing except maybe 10 minutes of your time. You don’t have to pay for a prequalification and you’re not obligated in any way.
Do you think you’d rather continue renting but are not sure? Talk to a loan officer. In most cases it will cost much less to buy than to rent in the Colorado Springs Area. If you’re a veteran or on active duty, a VA loan requires nothing down and if you’re not military or a Veteran there are numerous grants and loan programs that will cover the down payment for you.
Yet, whether or not the prequalification conversation tells you you’re qualified, at least you know where you stand. If you need some time to work on some things, you’ll know what they are and when you can expect to have them addressed. But the first step belongs to you. At some stage in your life you’ll make that call—so why not make it today?
Looking to get started but do not know which Lender or Bank to call? We will happily recommend the top local lenders so you can count on competitive pricing, expert knowledge and access to all the loan programs, grants and credits. Call us at 719-574-2227 or reach out to us online.