Questions to Ask When Applying for a Mortgage in Syracuse New York
Mortgages can be confusing. There are a lot of different types, a lot of different lenders, and a lot of pros and cons to each choice. Without a clear idea of your mortgage, you might run the risk of having trouble with it in the long run, so it’s always a good idea to do your research.
But where do you start?
We here at Procopio Real Estate believe the best way to learn is to ask questions. When it comes to mortgages especially, asking the right questions can help you prevent potential loss.
If you’re interested in purchasing a property in the state of New York, here are some questions about mortgage in New York to get you started:
How does a mortgage work?
A mortgage is a loan you take out in order to purchase a house. It consists of the following:
- a promissory note that you must sign to guarantee your repayment, which includes process, your monthly payment, and length of your mortgage;
- the mortgage itself, which includes a recourse for the lender if you fail to pay off the full loan.
These are the basic components of a mortgage, regardless of what type you choose to apply for.
What types of mortgages are there?
There are various types of loans, but the main things to consider are if a mortgage is fixed or adjustable.
A fixed-rate mortgage is a loan with a fixed interest rate for its entire term.
An adjustable-rate mortgage has an interest that varies throughout the loan term.
These two types of mortgages have their own pros and cons depending on the situation. When considering a mortgage, always consider your financial state as well.
Apart from these main two types, there are government programs that offer loans as well. The Federal Housing Administration (FHA), the Veterans Administration (VA), and the US Department of Agriculture (USDA) offer mortgage loans meant to assist specific demographics. There are also government programs that offer assistance with your mortgage down-payment.
Do I qualify for down-payment assistance?
You might need to assess whether or not you qualify for down payment assistance, or ask your mortgage lender for further advice.
There are a variety of government-sponsored mortgage programs that assist different individuals, from military veterans to first-time homebuyers. Military personnel, whether active or retired, can apply for a loan from the VA. Meanwhile, first-time home buyers who might have lower incomes and credit scores can seek help from the FHA.
Your specific situation might allow you to prequalify for a particular type of mortgage from these government programs or even an established mortgage lender.
Speaking of prequalification...
What’s the difference between mortgage preapproval and prequalification? Which one should I apply for?
It’s easy to confuse mortgage preapproval and prequalification for each other, but there is a key distinction between the two.
Prequalifying for a mortgage means your lender has assessed you and given you a hypothetical mortgage estimate based on estimates regarding your income, credit score, assets, and other aspects of your financial situation.
Preapproval for a mortgage means your lender has verified all the factors involved in your financial situation after requesting official documents. Your bank statements, tax returns, and W-2s are required for preapproval so that your lender can give you a verified, accurate figure on your mortgage.
Preapproval is a great way to show that you are serious about purchasing a property, but you might consider prequalification as the first step toward mortgage preapproval. Prequalification is one way to get an estimate on your mortgage as well.
This brings us to the next mortgage question.
Can I get an estimate on my mortgage?
According to the Consumer Financial Protection Bureau rules, any mortgage lender you deal with is required to provide you with a breakdown of fees and the estimated cost of your loan.
To receive the estimate, the borrower is required to provide the following details:
- Social Security number
- Property address
- Loan amount requested
Providing the information is similar to getting mortgage prequalification or preapproval; the more accurate the information, the more accurate your estimate will be.
Upon receiving your loan estimate, you must also make sure it includes the following:
- Mortgage interest rate
- Costs of closing
- Estimated monthly payment.
An estimate is a great way to gauge if a loan works for your situation. Be sure to request multiple estimates from different brokers in order to get a full view of your loan options. The difference between loans could boil down to the interest rate or annual percentage rate and how that affects your ability to pay off the loan.
This brings us to our next mortgage question.
How do interest rates and APRs affect my mortgage?
Your estimated loan cost should include the interest rate and annual percentage rate (APR). The interest rate can vary based on a number of factors, such as:
- credit score,
- property location,
- mortgage type,
- and more.
Your APR is determined by your interest rate and the fees a lender will charge for your loan. It’s a great way to get an idea of the loan’s full cost.
Dealing with a mortgage can be tricky, but there are a wealth of resources available for you to take advantage of. Whether it be online or from a trusted mortgage broker, learning the ins and outs of your mortgage is the best way to avoid any issues in the future.
Need more info?
Procopio Real Estate is here to help answer your mortgage questions and offer you the best possible options for when you purchase your next property.
If you have more questions about mortgage in NY, we’d love to be of assistance. Contact us at 315-928-5394 to get started.