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What Is a Mortgage and How To Get One?

A Guide for First-Time Homebuyers


What is a Mortgage?

 

mort·gage

noun

            a legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.

In simple terms, a mortgage allows you to borrow the hundreds of thousands of dollars typically needed to buy a home. This money can only be used to purchase, refinance, or renovate real estate. So, if you’re planning to buy a house or any other type of property, you’ll likely need a mortgage.

While a mortgage covers most of the cost, buyers usually make a significant upfront payment known as a down payment. The mortgage then covers the remaining amount, which you repay through monthly installments, often over 30 years.

Your mortgage comes with an interest rate, which is the cost of borrowing the money and is expressed as a percentage. For example, if you borrow $350,000 at a 4% interest rate, you would initially pay $14,000 in interest annually. This interest is how the lender profits from the loan. Mortgage rates, like those on auto loans or credit cards, are expressed as a percentage of the amount borrowed.

How To Get a Mortgage
  1. Get Preapproved - Getting preapproved is a crucial step in the homebuying process. Preapproval is provided by a lender and requires that you provide financial documents that verify your income, credit history, and debt information. This information determines how much they are willing to lend you.
  2. Choose a Lender - Find a supportive lender to make your process smoother. A great option is LGI Mortgage Solutions, known for their personalized service and support throughout the mortgage process.
  3. Gather Documents - Prepare financial documents, including pay stubs, tax returns and bank statements. Also, be prepared to provide details about the specific property you would like to buy.
  4. Apply for the Loan - Fill out the mortgage application with LGI Mortgage Solutions or your selected lender. Be prepared for a credit check and to answer any additional questions.
  5. Obtain Approval and Attend Closing - Once you are approved and you have reviewed the Loan Estimate details, you are ready to finalize the mortgage by signing documents at your closing meeting. Then, you will receive the keys to your first new home!

 

Consider aiming for a 20% down payment to lower your payment and secure better rates. Alternatively, with LGI Homes, you have the exciting option of purchasing your brand-new home with 0% down, depending on your chosen loan type. This makes homeownership more accessible than ever.

What’s more, every LGI home comes with a range of upgrades included at no additional cost, and you could be living in your new home within just 30 to 45 days. You’ll benefit from working with LGI Mortgage Solutions, whose mortgage team will be on-site to assist and support you throughout the entire process.

 

 

 

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