Funding Your Future: Mortgage Basics

FUNDING YOUR FUTURE MORTGAGE BASICS WHAT IS A MORTGAGE? A loan provided by a financial lender to buy a house MORTGAGE TYPES Fixed-rate = set interest rate • Predictable monthly payments for borrowers • May be costly to refinance if interest rates drop Variable-rate = fluctuating interest rate • Interest rates increase or decrease over time • Borrowers can take advantage of lower initial interest rates How Do You GET A MORTGAGE? 1 Determine your mortgage payment budget General rule: no more than 28% of gross income Consider other major expenses Car College tuition Insurance 2 Evaluate your credit report HIGH A LOWI credit score interest rate • Do not open new lines of credit To improve your credit • Pay balances on existing credit cards • Make timely loan payments score: 3 Remove inaccuracies from your credit report 4 Get a mortgage pre-approval Meet with a financial lender Use the mortgage estimate as proof of purchasing capacity to sellers Disclose your income, assets, and liabilities Research financial lenders Apply for mortgage Receive approval for mortgage 6 SOURCES: INFOGRAPHIC PROVIDED BY: www.investopedia.com/university/mortgage www.investopedia.com/university/mortgage/mortgage1.asp www.investopedia.com/university/mortgage/mortgage2.asp www.investopedia.com/university/mortgage/mortgage5.asp www.investopedia.com/university/mortgage/mortgage8.asp GCS wWW.MYGCSCREDITUNION.COM CREDIT UNION FUNDING YOUR FUTURE MORTGAGE BASICS WHAT IS A MORTGAGE? A loan provided by a financial lender to buy a house MORTGAGE TYPES Fixed-rate = set interest rate • Predictable monthly payments for borrowers • May be costly to refinance if interest rates drop Variable-rate = fluctuating interest rate • Interest rates increase or decrease over time • Borrowers can take advantage of lower initial interest rates How Do You GET A MORTGAGE? 1 Determine your mortgage payment budget General rule: no more than 28% of gross income Consider other major expenses Car College tuition Insurance 2 Evaluate your credit report HIGH A LOWI credit score interest rate • Do not open new lines of credit To improve your credit • Pay balances on existing credit cards • Make timely loan payments score: 3 Remove inaccuracies from your credit report 4 Get a mortgage pre-approval Meet with a financial lender Use the mortgage estimate as proof of purchasing capacity to sellers Disclose your income, assets, and liabilities Research financial lenders Apply for mortgage Receive approval for mortgage 6 SOURCES: INFOGRAPHIC PROVIDED BY: www.investopedia.com/university/mortgage www.investopedia.com/university/mortgage/mortgage1.asp www.investopedia.com/university/mortgage/mortgage2.asp www.investopedia.com/university/mortgage/mortgage5.asp www.investopedia.com/university/mortgage/mortgage8.asp GCS wWW.MYGCSCREDITUNION.COM CREDIT UNION