Mortgages By The Number

For the first-time home buyer, mortgages come with a seemingly incomprehensible flood of numbers. Even seasoned home buyers can find themselves confused; between interest rates, credit scores, and down payment percentages, there are a lot of numbers to juggle. To help sort through the confusion, the following are the numbers you most need to understand in order to make a sound financial decision.

It's important to understand the process, because not knowing can cost you big. Working with a lender who's willing to take the time to walk you through the process and answer your questions can help you make the right decision.

77% - the percentage of borrowers who only apply to one lender.

Big mistake - not shopping around can cost you. You shop around for other big purchases, and you should do some shopping around for your mortgage as well, since it's likely to be one of the biggest purchases you'll ever make. Get estimates from several lenders and study the terms closely before deciding which lender offers you the best deal. The lender that communicates and explains the answers to your questions, typically, will be more efficient through the process. Also, trust your intuition!

740 – the credit score that will qualify you for the best interest rates on mortgages.

Having a lower score won't shut you out from buying a home, there are many programs for borrowers with all kinds of situations. Don't count yourself out, a good lender knows what options you have and will help you get the loan that best fits your needs.

Prospective lenders will pull your credit score as part of the loan application process, but if you'd like to know your score before you start shopping around, you can get a free copy of your credit report from many online credit reporting companies.

20% - cash down payment required for a conventional loan.

Don't have 20% to pay down, there are loan programs that require much less, some even offer 0% down payment. Find a lender that offers a multitude of programs.

60% - number of homebuyers who used retirement savings to make down payments in 2015.

Just because a lot of people are doing it, it doesn't mean it's a good idea. Before you dip into your 401(k) or IRA for a mortgage down payment, consider the tax implications. Consult your certified public accountant for advice.

13 – the average number of year's home buyers stay in their homes.

The amount of time you plan to remain in your home makes a big difference in what type of mortgage will work best for you. If you're in a job where you move every few years, you may decide that lower rates offered on ARMs (adjustable-rate mortgages) makes sense. On the other hand, if you plan on staying in the same place indefinitely and need the assurance of a predictable monthly payment, you'll probably want to take advantage of today's historically low mortgage interest rates by locking in at a fixed rate for 15 – 30 years.

40% - number of seniors 65 and older who carry a mortgage.

If your goal is to be mortgage-free in retirement, you will want to select a loan with a shorter term, so it will be paid off before you reach retirement.

Bank of England Mortgage is always happy to help educate homebuyers. We'll help you gain an understanding of the mortgage process so you can make the best choices for your home financing goals.