Military Mortgage 101
What is a mortgage?
As a potential homebuyer, you will apply for a mortgage. Unless you have enough money to buy a home outright, you will need a source of additional funding. A mortgage is a loan given by a lending institution so that you can pay the seller in full for a property.
How do I secure a mortgage loan?
The lender has to determine how much you are qualified to borrow. The application process involves a financial background check, including review of your credit score. To qualify for most loans, you also must pay at least a small down payment. For example, to qualify for a Federal Housing Administration (FHA) loan, your down payment must be at least 3.5%. The down payment proves to the lender that you are vested in paying off your loan.
How will I pay my lender back for my mortgage?
Your lender will work with you to determine the sum of mortgage payments, and how often you will pay them. It is important to do your due diligence when you select your mortgage program and/or lending company. With different sources come different interest rates, which is the cost of borrowing money in the first place.
Other factors that determine your mortgage payment amount are whether or not your interest rate is fixed, and also the term of the loan. Your lender will help you understand and determine what type of payment schedule makes the most sense for you.
What makes buying a home different for a service member?
There are many different mortgage loan programs and AAFMAA Mortgage Services will help you find the mortgage that best fits you. Every mortgage loan program has a different set of rules and requirements. If you have ever served in the military, you most likely qualify to apply for a loan program through the U.S. Department of Veterans Affairs (VA loan). A VA loan is a benefit because many programs require little to no down payment, and the fees involved are usually less than for other programs.