Homeownership is a big step toward achieving the American dream, and it can be made easier by securing a favorable home loan. However, there are many different types of mortgages, and it’s important to understand them before signing on the dotted line. Below are five questions to ask your leading institution about your loan, particularly if you’re a first-time homebuyer.

5 Questions to Ask Before Getting a Mortgage

What Type Is Best for My Needs?

Mortgages can either be adjustable-rate (ARM) or fixed-rate. If you intend to stay in your home long-term, then an ARM might be best, since the interest rate is eligible to change over time. However, if you don’t see yourself staying in your house for the long haul, then a fixed-rate mortgage may give you more affordable payments.

How Much Is the Down Payment?

Depending on the type of loan you get, the amount required for a down payment will change. Make sure you’re financially prepared to pay the amount. The majority of mortgages will come with a 20% down payment unless you’re getting an FHA loan, which will get you a lower down payment.

What Is the Interest Rate?

You want a mortgage that comes with a low interest rate, which is the cost your lender is charging you to borrow money. A higher interest rate will increase your monthly payments, while a lower one will save you money in the long run. To get lower mortgage rates, ensure you have good credit.

How Much Is the Monthly Payment?

The monthly payment is how much you’ll owe your lender each pay period. Consider how much you can pay based on your monthly salary and be sure to include other costs like insurance, taxes, and retirement planning. You can even meet with a financial planner to better understand how much you’re able to pay.

What Documents Do I Need to Provide for This Loan?

Like the down payment, the paperwork and amount of savings you’ll need will depend on the type of loan you’re getting. Typically, you’ll need to show that you have enough funds for the down payment and closing costs. In addition, you’ll need proof of income and enough savings to cover as much as six months of payments.

Do you need a mortgage to get the home of your dreams? Aloha Mortgage, LLC in Honolulu, HI, has been providing the residents of Oahu with the most favorable mortgages and rates for over 19 years. Their team is committed to shopping for the best loan programs and interest rates so that you can own a home without stressing over your finances. Whether you need a mortgage for your first home or need refinancing assistance, their goal is to make home ownership more accessible and affordable. Give them a call at (808) 255-9366 to schedule an appointment.