What Is An Fixed Rate Mortgage?
If your goal is long-term home ownership, you may enjoy the comfort of having a consistent payment each month. With a Fixed Rate Mortgage, your loan will be paid over a period of 15 or 30 years with the same interest rate each month. Your payments are based on a fixed interest rate, principal loan amount and amortized interest over 15 or 30 years. With this type of loan, you can create a low interest, dependable mortgage payment that will stay the same for the life of your loan. You may pay your mortgage at any time without prepayment penalties. Your actual payment will vary based on your situation and the current interest rates at the time you apply. A fixed rate mortgage can be applied to any type of loan you take out, whether that be a VA, Conventional, FHA, or Jumbo Loan.
How to Qualify
Typically, lenders want your monthly debts, including the estimated cost of your new loan payments, to be less than 28 percent of your gross monthly income. You will need to provide proper pay stub, 1099s, w-2’s, award letters, and tax returns.
Lenders also want to see that you have been employed with the same company for about two years. Like your debt to income ratio (DTI), this means you are more likely to keep up with payments.
A high credit score (720 or better) signals to lenders that you will make your loan payments on time. Lenders usually like to see a score of at least 620 to qualify for a 30-year fixed loan. A high credit score can also lower your interest rate dramatically.
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