1. How much do I need for a down payment?

This is an interesting question because there are actually some loan programs out there that require 0% down! There are a number of first-time buyer programs that require between 3-5% as well. That being said, in New Hampshire, many homes end up with multiple offers and financing is a big consideration as to the strength of an offer, so oftentimes if a buyer has the ability to do so, a 10-30% down payment will help strengthen an offer. In addition,  putting more than 20% down is often advantageous as it helps borrowers avoid private mortgage insurance which can be quite costly.

2. What documentation is needed to get a mortgage?

When formally applying for a mortgage, there will be some initial documentation that will be required by the mortgage lender.  Documents such as an identification card, one months pay stubs, the past two years w-2’s and tax returns are all pretty commonly asked for by a mortgage lender. These tend to vary from buyer to buyer.

3. What’s the difference between pre-qualification and pre-approval?

A mortgage pre-qualification can easily be defined as an estimation of how much a buyer can borrow. This tends to sometimes be inaccurate and many lenders ask the buyer in a casual setting about their income, debts, and other assets without actually verifying. If someone is untruthful or doesn’t remember part of that information and it ends up being inaccurate it can delay or skew the process.

A pre approval is what every home buyer should obtain before they begin looking at buying a home. A mortgage pre-approval can be easily defined as a written commitment for a buyer from a mortgage lender. Keep in mind to obtain a pre-approval buyers will need to provide the documentation mentioned in #2.

4. Do I want an interest only loan?

Interest only loans are when the buyer only pays the interest on the mortgage for some of the loan, also known as an “interest period”. The term is usually between 5 and 7 years. After the term is over, many refinance their homes, make a lump sum payment, or they begin paying off the principal of the loan.

5. Should I get a fixed rate or adjustable rate?

The difference between a fixed rate and an adjustable rate mortgage is just that, for fixed rates the interest rate is set when you take out the loan and will not change. With an adjustable rate mortgage, the interest rate may go up or down. 

6. Can I get a home mortgage with a low credit score?

The answer here largely depends on the type of loan that you need and the amount of money that you are willing to put down. Can we remove this line? Usually, if you have a credit score below 580, you’ll be able to get a mortgage with a higher down-payment.