Mortgages: Your Questions Answered

Mortgages: Your Questions Answered


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As a new homebuyer, you’ll likely have a million questions about what you qualify for, how to get a mortgage, and what you can expect from the homebuying process. If this sounds like you, you’ve come to the right place – the team at M&M Mortgage is ready to answer the most common questions you (and many others) have about mortgages. Let’s get started.

What is a Mortgage?

Let’s start with the most basic question: what exactly is a mortgage? A mortgage is a type of loan you obtain to buy a home that you otherwise would not be able to afford with a cash payment.

A mortgage is essentially a binding agreement between you and your lender that gives them the right to repossess the house if you cannot pay for your home. However, trust us: it sounds scarier than what it is. The majority of homeowners have a mortgage and have no issues.

How Does a Mortgage Work?

If you’ve never had a mortgage before, it can sound intimidating. However, think of your mortgage as you would your credit card. Your credit card allows you to buy something without putting money down. Each month, you have to make a payment that accrues interest until the payment is paid back in full. That’s essentially how a mortgage works.

When you take out a mortgage, you’re using it to finance a property you have to pay back over time. Just like you don’t technically own that flatscreen TV you put on your credit card until it’s paid off, you don’t technically own your home until your final mortgage payment has been made.

Types of Mortgage Loans

There are four main types of mortgage loans:

USDA loans: This loan is only available to those living in rural areas – in other terms, areas outside of the suburbs. Eligible homebuyers must not have an annual income that is greater than 115% of the area’s median income.
VA loans: This type of government-backed loan is ideal for veterans, their spouses, and active-duty military. It is backed by the U.S. Department of Veterans Affairs. With a VA loan, eligible homebuyers can purchase a home with 0% down and no mortgage insurance.
FHA loans: This type of loan is backed by the U.S. Federal Housing Administration (FHA) and is one of the most popular types of mortgage loans. Eligible buyers only need to have a minimal credit score of 580 and only put 3.5% down on their home as a down payment. These are ideal for those who may have previously filed for bankruptcy and are building back their credit or have a higher debt-to-income ratio.
Conventional loans: Conventional loans – often referred to as conforming loans – must meet the standards and regulations put forth by Freddie Mac and Fannie Mae, the government agencies that buy loans from lenders. If you get a conventional loan and put down less than 20%, you will be required to obtain private mortgage insurance to protect your lender in the event of a default.

What is Private Mortgage Insurance? And Do I Need It?


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If you put less than 20% down with a conventional loan, then you will need to obtain private mortgage insurance to protect your lender. The cost of this insurance would simply be wrapped into your monthly mortgage payments. Many FHA and USDA loans require mortgage insurance.

Mortgage insurance is always used to protect your mortgage lender in the event you default on your loan or are otherwise unable to pay. However, if you are not required to get mortgage insurance, it may not be necessary. Remember, this insurance isn’t there to protect you – it’s there to protect your lender.

Where Do I Get a Mortgage?

You can get a mortgage from a certified lender. These lenders will either be a private entity or a bank or credit union. When you’re ready to get a mortgage, it’s essential to shop around as different lenders may be able to give you different quotes.

The more you shop around, the more you can feel confident when you’ve found the one, especially if you need to contact your mortgage lender for any reason after the sale concludes.

How Do I Get Approved for a Mortgage?

To get a mortgage, you’ll want to decide which lender you feel comfortable with. They can help you understand exactly how much you qualify for, so be honest with them about your current debt-to-income ratio and other expenses. First, your mortgage lender will determine if you’re pre-qualified for a mortgage. This includes the conversation mentioned above to see if you meet the eligibility requirements.

Next, your lender will run a hard credit check on your credit report and verify your income to settle on a final answer. This pre-approval process then allows you to move forward with putting an offer in with your preferred home.

What Are Closing Costs?

After your loan has been approved, you’ll have to make your down payment on your new home, as well as sign associated paperwork and take care of closing costs. Closing costs are fees you pay to your lender and other individuals involved in the sale and are worth approximately 3 to 6% of your home’s value. In some cases, your realtor may be able to negotiate your closing costs to be paid for by the seller.

Finding a Home Takes Time, But Getting a Mortgage With M&M Mortgage is Easy

We hope this FAQ helped answer some of your questions about getting a mortgage and buying a house. While the process can seem intimidating on the surface, having the right lender by your side can make it easier. At M&M Mortgage, we have years of experience working with first-time homebuyers. We will answer any questions you have. Call us today at (651) 639-9800 to ask an expert.

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  • Experienced and Seasoned Ownership and Operations Team
  • Broker through a Variety of Wholesale Lenders
  • NMLS and SAFE Licensed Mortgage Consultants

 We are committed to building a diverse workforce of talented individuals who embody our mission to bring smart perspectives and practical outcomes to our clients. At our core, we believe diversity and inclusion are table stakes and work each day to promote these values through a variety of initiatives, activities and organizations.

M&M Mortgage, LLC

1700 West Highway 36
Roseville, MN 55113
Phone: (651) 639-9806
Fax: (651) 829-3226