It is essential to understand the ins and outs of mortgages before you secure one. The last thing you want to do is to commit a financial mistake that may have severe repercussions on your future financial life.
Make sure that you are armed with the right information that will help you to make an informed decision. Here are some of the frequently asked questions about bank statement mortgage loans that you need to know.
Do I Need Great Credit Score to Get Mortgage?
Not necessarily but it can help a great deal when applying for non qm mortgage loans. You can still obtain a higher-cost mortgage with a credit score in that is below 600. However, to get a conventional mortgage, your credit score must be at least 620.
The most important thing that you need to keep in mind is that the lower your credit score, the higher the interest rate. Therefore, before you consider going for that mortgage, make sure that you work on your credit score.
Should I Choose a Fixed-Rate or an Adjustable Rate Mortgage?
This will also depend on the prevailing market interest rates. For instance, if the interest rates are low, a fixed-rate mortgage will make a lot of financial sense. However, if the current interest rates are high and there are a lot of key indicators that the rates might drop in future, you should consider a variable-rate mortgage.
While a majority of homebuyers prefer fixed-rate non qm loans, there are some situations where the adjustable rate mortgage could save you a lot of money in the long run.
What Documentation Is Required to Get a Mortgage?
Although the documents required to apply for a mortgage may vary from one lender to another, some things are common regardless of the lender.
Documentation such as your social security card, past two years w-2’s and bank statements are commonly asked by mortgage lenders. You will also need your driver’s license, asset statements, a fully executed purchase contract, and updated pay stubs. The lender may also request you to provide gift letter for down payment.
How Much of a Down Payment Do I Need?
The simple answer to this question is that you can qualify for a conventional mortgage with as little as a 3% down payments You can also be eligible for an FHA loan with as little as 3.5% down payments
But, you need to keep in mind that you will have to pay the Private Mortgage Insurance (PMI) if your down payment is less than 20% of the home’s selling price.