Are you ready to take the leap into homeownership? If so, you're likely looking into a mortgage unless you're able to pay in cash. Before taking on the responsibility of a mortgage loan, which for most American homeowners is their largest debt, you should learn as much as possible. Here are four facts you should know about mortgage loans.

1. You Don’t Need Perfect Credit

It will always be beneficial to have good credit in the 700 or 800 range when applying for a mortgage, based on our experience. However, just because you don't have AAA credit doesn't mean you're ineligible for home mortgage loans. People with a fair credit score can get approved, but a fair score or higher is ideal for better rates.

2. Down Payment May Be Lower Than You Thought

Many people automatically expect to pay 20% down. However, many mortgage loans only require a 5% down payment, according to Homebuyer. As a veteran or a first-time home buyer, your initial down payment can be even lower. If you apply for a first-time homeowners program, your down payment may be as low as 3%, according to Bankrate. American veterans often get home mortgage loans for even less down.

3. Score Affects Interest Rates

Even if you get approved with a lower credit score, it's worth holding off on applying for home mortgage loans until you can raise your score. You'll see a drastic improvement in your monthly payments if you can raise it to a fair or good range. The better your score, the less interest you will pay. Consider using credit score improvement services to get the best deal possible when buying your home.

4. Loan Length Affects Interest Rates

Most home mortgages have lengths of 15 years or 30 years, according to Money Tips. In general, a shorter-term mortgage loan comes with a lower interest rate. Ask your home mortgage loan provider for their best options to help you lower your interest rate.

According to the National Association of Realtors, expect to pay an average monthly payment of $2,300 for your mortgage. If you need a reputable mortgage broker, we start the process in 24 hours and are available seven days a week. Contact Neighborhood Mortgage today to take the next step to homeownership by applying for home mortgage loans at our company.