Demystify mortgage types, key terms, and the pre-approval process. Get the knowledge you need to secure the best loan for your Vermont home.
Understanding different loan types helps you choose the best option for your financial situation and homeownership goals.
Traditional loans not backed by the government, typically requiring higher credit scores and down payments.
Best For:
Buyers with strong credit and stable income who can afford a larger down payment.
Federal Housing Administration loans designed for first-time buyers and those with lower credit scores.
Best For:
First-time buyers or those with limited savings for down payment and lower credit scores.
Veterans Affairs loans exclusively for eligible military service members, veterans, and spouses.
Best For:
Eligible veterans, active-duty service members, and qualifying spouses.
U.S. Department of Agriculture loans for rural and suburban homebuyers with moderate incomes.
Best For:
Buyers in rural Vermont areas who meet income requirements and want no down payment.
Familiarize yourself with these essential mortgage concepts to make informed decisions and communicate effectively with lenders.
The annual cost of borrowing money, expressed as a percentage of the loan amount. This affects your monthly payment and total cost over the life of the loan.
The true cost of your loan, including interest rate plus fees and other costs. APR is typically higher than the interest rate and helps you compare loans.
Fixed-rate mortgages maintain the same interest rate for the entire loan term. Adjustable-rate mortgages (ARMs) start with a lower rate that can change after an initial period.
Insurance required on conventional loans when down payment is less than 20%. PMI protects the lender and typically costs 0.5-1% of the loan amount annually.
Your monthly debt payments divided by your gross monthly income. Most lenders prefer a DTI of 43% or less to qualify for a mortgage.
The loan amount divided by the property value. A lower LTV (higher down payment) typically results in better loan terms and no PMI if LTV is 80% or less.
Pre-approval is a critical first step that shows sellers you're serious and helps you understand your buying power.
Collect recent pay stubs, W-2s, tax returns (2 years), bank statements, and information about debts and assets.
Review your credit report for errors and know your score. Most lenders require at least 620, but higher scores get better rates.
Determine how much house you can afford based on income, debts, and savings. Use our mortgage calculator to estimate payments.
Compare rates, fees, and terms from multiple lenders. Don't just focus on interest rate—consider closing costs and service quality.
Complete the application with your chosen lender. They'll verify your information and order a credit report.
Once approved, you'll receive a letter stating the loan amount you qualify for. This shows sellers you're a serious buyer.
In Vermont's competitive housing market, having a pre-approval letter is essential. Many sellers won't even consider offers without one, especially in popular areas like Burlington, Stowe, and Montpelier.
Pre-approval typically takes 1-3 business days and is free with most lenders. It's valid for 60-90 days, giving you plenty of time to find the right home.
Pay bills on time, reduce credit card balances, and avoid opening new credit accounts before applying.
Putting down 20% or more eliminates PMI and often qualifies you for better interest rates.
Rates can vary significantly between lenders. Compare at least 3-5 lenders to find the best deal.
Buying points upfront can lower your interest rate if you plan to stay in the home long-term.
Understanding the mortgage timeline helps you plan ahead and know what to expect at each stage of your home buying journey.
In Vermont, the typical timeline from accepted offer to closing averages 45-60 days. This is slightly longer than the national average due to Vermont's thorough inspection processes and rural property considerations.
Plan ahead for seasonal variations—winter closings in Vermont may take longer due to weather-related inspections and appraisal challenges. Working with a local lender familiar with Vermont properties can help expedite the process.
Use our mortgage calculator to estimate your monthly payments or contact us to discuss the best loan options for your situation.
