Did you know that our real estate agents in Napa, CA, can help guide you through the entire home buying process? We know how to locate properties in your desired neighborhoods and price range, negotiate the best terms, and finalize any loose ends at closing. We’re also here to answer several questions you might have about what you need to know about mortgage loans before you begin applying for one.
What to Know Before You Apply for a Mortgage Loan
Buying a home is often the biggest financial investment you can make. Taking the time to understand how mortgages work and knowing how to comparison shop for loans can save you a significant amount of money over the life of your mortgage.
How Much Loan Do You Qualify For?
Prequalifying for a mortgage isn’t the same as being preapproved for one. Prequalification is helpful because it lets you know how much you can borrow before looking at houses or making offers. Your Napa Valley real estate agent can suggest some good mortgage lenders you can talk to about getting prequalified. Keep in mind that you’re under no obligation to obtain your mortgage loan from the bank you get your prequalification from.
When to Get Preapproved
Preapproval tells you how much you can borrow and what your interest rate might be. It’s performed by a lender who carefully analyzes your finances and is usually done after prequalification but before you make an offer on a property. Preapproval doesn’t guarantee you’ll get a particular mortgage, but if all your financial essentials remain unchanged during the home buying process, you likely will.
Does Putting 20% Down Help With a Mortgage?
Most everyone knows that the larger the down payment, the smaller the mortgage loan will be and the less interest you’ll pay over the life of the loan. Another good reason for putting down at least 20% for a conventional mortgage is that anything below that requires paying private mortgage insurance (PMI). The standard cost of PMI is about one percent of the outstanding mortgage balance, which is added to your monthly payment. Lastly, mortgage applicants with smaller down payments usually pay a higher interest rate on their loans.
What To Avoid During the Borrowing Process
As part of the preapproval process, the lender pulls a new credit report to check for any significant changes in your finances. While you’re getting prequalified and preapproved, avoid paying off all your debts, and don’t apply for new credit cards or other loans.
Get All Your Napa Valley Real Estate Questions Answered
Connie & Jamie is committed to being your best choice in real estate agents in Napa, CA. We want to help you make your homeownership dream come true! Talk to one of our agents today to discuss the wide variety of different mortgage options available to suit your lifestyle and budget. We’re happy to refer you to reputable lenders who can answer all your questions and potentially get you prequalified and preapproved for a mortgage. And to learn more about all the real estate services we offer, contact us online today!