Buying a home can be daunting for first-time buyers - even more so if you're doing it in New York. It's a good thing you can find guides like this post that can help you navigate the complexities of getting a mortgage in New York:
What Are the Steps to Getting a Mortgage in New York?
There are six steps that people applying for a mortgage will need to go through:
It will be a long and often stressful journey, but it's important not to rush things.
Who Are the Key Players Involved in the Process?
Two main parties are involved in a mortgage application: the person applying for a mortgage and the lender or institution issuing the loan.
What Are Interest Rates and Other Terms of the Loan?
Interest rate refers to the amount that a lender charges the borrower. It is a certain percentage of the principal or the amount loaned. This is often noted yearly, so it's often called the annual percentage rate or the APR.
Loan Terms, on the other hand, refer to the terms and conditions set when someone's borrowing money. The terms can include the repayment period for the loan, the interest rate, possible penalty fees, and other fees associated with the home loan that may be applicable.
What Are the Different Types of Mortgages Available?
There are a few types of mortgages available in New York:
These are loans that are not backed by the government. You'll require a higher income and credit score to be qualified for a conventional mortgage, but the interest rates are often lower, so your mortgage will cost less over its lifetime.
There are other types of loans that the US government guarantees. These types of loans protect lenders from payment defaults. They also make it easier for lenders to provide potential borrowers with lower interest rates. Aside from that, they're also easier to qualify for, making them a good option for first-time buyers. Some government-backed mortgages you should check out include:
Fixed-Vs. Adjustable-Rate Mortgages
When comparing loans, you'll find that there are different interest rates for fixed and adjustable-rate mortgages. As you can tell from their names, fixed-rate loans, you'll be paying the same interest rate from the time you get the loan to the end of its term.
Adjustable-rate mortgages often start with a lower initial rate, but it could change throughout the loan, depending on the market.
Interest Only Mortgages
This is a loan in which the borrower would only pay the interest for a certain period with the principal balance unchanged during that period. This could be a good option for those worried about their cash flow.
How Much Can You Borrow?
In general, you can buy a home that's around three times your annual salary. For a quick estimate, you can multiply what you're making in a year by three. Let's say you earn a total of $100,000 per year. It means you can afford a home worth $300,000.
How Do You Choose the Right Lender?
As a homebuyer, you must do your homework to find the best mortgage lender that can meet your needs. Your options include banks, local credit unions, lenders, and more. Learn about the loan program they offer and the interest rates, down payment requirements, loan terms, insurance, closing cost, and other fees before you decide on one.
How Do You Compare Rates and Terms?
When comparing different offers, look at the interest rate and the annual percentage rate first. Your interest rate can vary depending on market factors and your creditworthiness. The APR includes interest rates and fees incurred when you borrow money, so it's a better tool to use when comparing mortgage costs. By comparing these, you'd be able to decide on the right lender for you.
What Factors Are Considered By Lenders?
Standards vary from one lender to another, but in general, there are four Cs that lenders evaluate:
What Are the Risks Involved in Taking Out a Mortgage?
There are certain risks that come with taking out a mortgage from a private lending company. For one, you're likely going to pay higher rates, and additional costs like lender fees, administrative fees, and such could add up to thousands.
Of course, there's always the risk of foreclosure if you fall behind on your loan payments. Because nothing is ever certain, there's a risk that you'd suffer a drop in your income and find it challenging to pay your mortgage, which could result in foreclosure.
What Are the Different Types of Mortgage Fraud?
Mortgage fraud refers to any false statements or misrepresentation done to get a mortgage loan from a lender. Some of the most rampant examples of mortgage fraud are income fraud, occupancy fraud, and appraisal fraud.
This is just scratching the surface. There's a lot more you need to understand when applying for a mortgage in New York. If you choose the right mortgage team, though, you'd get all the information that you need to make an informed decision.
Lakeview Mortgage Bankers is the premier mortgage team in Massapequa that offers the best solutions for mortgages in New York. Contact our team of mortgage experts today to learn more!