10 Frequently Asked Questions About Mortgages
We’ve compiled answers to your most pressing questions about home loans.
When it comes to homebuying, there’s a lot to know, not the least of which relates to financing. So we did our home loan homework and assembled answers to your most frequently asked questions about mortgages and the home buying process.
Frequently asked mortgage question #1: Which type of mortgage is right for me?
Just as houses come in a variety of styles to fit their owners, so do home loans. You’ll find a wide variety of mortgages to fit your financial situation and your individual goals, including:
- Conventional home loan
- Government-insured home loan
- Adjustable-rate mortgage
- Construction home loan
Do your research to understand your mortgage options and choose the home loan that is the best fit.
Frequently asked mortgage question #2: Why should I get prequalified for a mortgage?
A major benefit to getting prequalified is that it provides you with a realistic budget as you search for your future home.
In the current real estate market, prequalification is essential, especially for first-time buyers. In a multiple offer scenario, buyers without a letter of prequalification are often not taken seriously.
Explore the benefits of getting prequalified for a mortgage.
Frequently asked mortgage question #3: Should I choose a fixed-rate or an adjustable-rate mortgage?
Both fixed-rate and adjustable-rate mortgages have benefits for a borrower. In most cases, it comes down to your circumstances and risk appetite.
Historically, consumers have typically selected a traditional longer-term fixed-rate mortgage when buying a home. Since fixed-rate mortgages maintain the same interest rate for the life of the loan, there are no surprises. This is a great option — especially when rates are low — but it’s not the only option.
For the right buyer, an ARM can be a great fit. Learn more about the ins and outs of adjustable-rate mortgages to learn if an ARM is the right option for you.
Frequently asked mortgage question #4: Is an FHA loan a good option?
For the right borrower, an FHA loan can be the perfect mix of accessibility, affordability and flexibility. Because they are insured by the Federal Housing Administration, FHA loans generally have lower down payments, lower closing costs and lower credit requirements than conventional loans.
Learn more about the ABCs (and D’s) of FHA mortgage loans.
Frequently asked mortgage question #5: How do I get the best mortgage interest rate?
Your interest rate is an essential component of your home loan. Although economic factors partially determine rates, your individual financial decisions do have an impact.
Take these actions to score the best possible mortgage rate on your home loan:
- Shop around
- Shape up your credit score
- Pay down your rate with points
- Consider a shorter-term loan
- Save for a down payment
Get more information about how to get the best mortgage rate.
Frequently asked mortgage question #6: What should I know as a first-time homebuyer?
Buying your first home can seem challenging. Keep in mind that patience and preparation are vital in navigating the home loan process successfully. Check out top tips for first-time homebuyers from our team of mortgage lenders.
Frequently asked mortgage question #7: How do I get a mortgage if I want to build my home?
With current inventory in short supply, many buyers are choosing a different route: building a home. Although sometimes considered the slower and more expensive option, it doesn’t have to be.
With a Zions Bank one-time close construction loan, the lot purchase, construction and permanent loan can all included in one home loan transaction. This means there is only one set of home loan closing costs and loan documents.
Frequently asked mortgage question #8: How do I save for a down payment?
In most cases, you’ll need a down payment to obtain a home loan. Use a home buying calculator to find out how much house you can afford, then determine how much you’ll need to save for your down payment. Take advantage of direct deposit to make saving automatic every time you get paid.
For additional tips on saving for a down payment, read this article.
Frequently asked mortgage question #9: How do I get a mortgage for a second home?
Different mortgage and tax rules apply to second homes, especially if you plan to rent the house out during the year. If you’re considering buying a vacation home, review our five helpful tips.
Frequently asked mortgage question #10: Should I refinance my mortgage?
For some homeowners, refinancing their home loan makes sense, even in a rising interest rate environment. Here are four times when that might make sense.
Others choose a mortgage refinance to accelerate their timetable to pay off their mortgage, or to lock in interest rates.
Want to learn more? Visit the Zions Bank Home Loan Learning Center to compare home loans, answer your mortgage questions and discover additional mortgage resources, including a directory of Zions Bank mortgage lenders across Utah and Idaho as well as more information about the home buying process.
Loans are subject to credit approval. Terms and conditions apply. See a banker for details. Equal Housing Lender. NMLS #467014.
Ali Hardy is a freelance writer for Zions Bank.