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Things to Know before Applying

Before you fill out mortgage applications, there are a few must-know facts you should find out first. Here are the three things you should know before applying for a mortgage.

1. Your Credit Score

Regardless of whether you're filling out car loan or mortgage applications, you should always know your credit rating before applying. Your credit rating, or FICO score, will serve as a major determinant of your loan's terms and interest rates. This score represents the risk a potential lender is taking in lending to you. With regard to mortgage applications, this number is a gauge of how likely you are to pay back the mortgage loan. If you have a blemished credit history, you might wait to fill out one of our mortgage applications until you've made some improvements to your score. This is because a higher credit score will translate into lower interest rates and lower total borrowing costs.

2. The Total Cost of Borrowing

The total cost of borrowing requires you to understand the interest rates, fees, and charges that make the amount of money you will repay higher than the amount you borrowed. Before you fill out one of our mortgage applications, you should research current market interest rates to help you choose among lenders. You will also want to compare loans based on their APR, or annual percentage rate. This number takes into account a loan's interest rate as well as any fees and charges to reflect the true annual cost of borrowing. The APR is usually expressed as a percentage of the loan's principal. APR is a more valid basis of comparison than interest rate alone because it reflects the total cost of the loan, not just the interest expense. When you fill out mortgage applications, also be aware of whether you are applying for fixed-rate or adjustable-rate mortgages, as they will have different costs associated with them.

3. What You Can Afford to Borrow

Another thing you should know before filling out mortgage applications is how much you can afford to borrow. You can find many online calculators to help you figure out your monthly payments based on the loan's term, potential interest rates, and how much you borrow. Make sure you have worked out a budget detailing your monthly expenses before you fill out mortgage applications. That way, you can know exactly how much you can afford to borrow without straining your budget. A good rule of thumb is that housing costs should not claim more than 28% of your gross monthly income. When making your budget, don't forget to allow for unexpected expenses. If you have any questions, please visit our FAQ page.

Learn everything you need to know about how our mortgage applications work. Here are the answers to the most commonly asked questions about mortgage applications.