What’s Included In Your Mortgage

Buy a house and you probably just made the largest purchase of your life, a decision that will impact you daily. Buy the right house and you can finally start to feel rooted, as if you found the place where you feel balanced and centered. You can make this house your own, hanging original art pieces and pictures on the walls and filling the space with furniture and knick knacks that showcase your remarkable personality, your amazing style.

Stop guessing how much house you can afford

If you let yourself develop your creative muscle, there’s a strong likelihood that you created those original art pieces yourself. Clearly, buying a house is about more than the base price of the house. It’s about stepping into new experiences. Allow those experiences to be rewarding, certainly financially stress free. But, that won’t happen like magic. It takes thought, action and understanding. You can do it.

You must know everything that you’ll be responsible to pay for before you buy a house. It could keep you out of foreclosure should you or your spouse get laid off. It could keep you from taking on debt that will put your finances in a gripping headlock. Specific fees that you may incur when you buy a house vary, depending on the lender. However, general fees and costs you can expect to be responsible for include:

  • Base price of the house (It’s easy to think that the base mortgage is all you’ll have to repay when you buy a house. But, although it’s the largest chunk of what goes into a mortgage, the base price or principal of a house is only one piece of the costs.)
  • Interest or adjustable rate mortgage (Adjustable interest rates may start lower, but they can shift upwards and put your mortgage out of reach. Research lenders. Make sure you’re not working with a predatory lender.)
  • Property taxes
  • Down payment (The bigger the down payment you can put on your new house, the better. It can lower your monthly mortgage payments significantly.)
  • Closing costs (Try to negotiate a deal that splits closing costs with sellers. You might even get a deal where house sellers pay all of the closing costs.)
  • Homeowner’s association fees
  • Mortgage insurance
  • Homeowners insurance (This is separate from the mortgage insurance. Homeowners insurance covers the costs of damages the house may incur during natural and human-made disasters. This insurance is similar to car insurance.)
  • House inspection fees

Eliminating mortgage fee surprises helps you enjoy your home

There is more than one way to become a homeowner. Options include rent-to-own, a newly built house and buying an old house that you restore. Housing communities also vary, giving you the chance to move into communal housing neighborhoods, single family homes, tiny houses, mobile homes and elegant Victorian houses. You could also make the land more a priority than your living space, especially if you aim to start a farm or another outdoor business.

Go with the housing option that best matches your personal needs. You’re probably going to be spending a lot of time in your new home. But, don’t just fall in love with your house. Set yourself up for financial success. Be aware of all costs that go into your mortgage before you buy a house. Also, understand additional costs that you are responsible for paying a lender that aren’t built into your monthly mortgage payments. Shop for and buy a house with your eyes wide open.

How to Choose the Right Mortgage Option

Buying a home represents a dream come true for many individuals. However, to transform this dream into a reality, you’ll likely need to qualify for a mortgage.

Finding the right mortgage may seem difficult, particularly for a first-time homebuyer. Fortunately, we’re here to help you make sense of all of the mortgage options at your disposal so you can select the right option based on your budget and lifestyle.

Here’s a closer look at three of the most common mortgage options for homebuyers.

1. Fixed-Rate

With a fixed-rate mortgage, there are no cost fluctuations. This means that you’ll pay the same amount each month for the duration of your mortgage, regardless of economic conditions.

For example, if you sign up for a 15- or 30-year fixed-rate mortgage, you’ll wind up paying the same amount each month until your mortgage is paid in full. In some instances, you may even be able to pay off your mortgage early without penalties.

A fixed-rate mortgage often serves as a great option for those who don’t want to worry about mortgage bills that may fluctuate over the years. Instead, this type of mortgage guarantees that you’ll be able to pay a consistent monthly amount for the life of your loan.

2. Adjustable-Rate

An adjustable-rate mortgage represents the exact opposite of its fixed-rate counterpart. The costs associated with this type of mortgage will change over time, which means you may wind up paying a fixed interest rate for the first few years of your loan and watch this rate go up a few years later.

For instance, a 5/1 adjustable-rate mortgage means that your interest rate is locked in for the first five years of your loan. After this period, the interest rate will adjust annually. Therefore, a rising interest rate may force you to allocate additional funds to cover your mortgage costs in the future.

An adjustable-rate mortgage may prove to be a viable option if you plan to live in a home for only a short amount of time. Or, if you’re a college student or young professional, an adjustable-rate mortgage may help you pay less for a home now, secure your dream job and become financially stable by the time your initial interest rate period ends.

3. VA Loans

The U.S. Department of Veterans Affairs (VA) provides loans to military service members and their families. These loans are backed by the government and enable individuals to receive complete financing for a house. Thus, with a VA loan, an individual is not required to make a down payment on a house.

If you ever have concerns or questions about mortgage loans, banks and credit unions are available to help. Also, your real estate agent may be able to offer mortgage insights and tips to ensure you can secure a mortgage quickly and effortlessly.

Learn about all of the mortgage options that are available, and by doing so, you can move one step closer to buying a home that matches your budget and lifestyle.

Interest-Only Mortgage And What You Need to Know

When it comes to mortgages there is a lot to know and a lot of choices. One loan that was popular before the housing crisis was the interest-only loan.

An interest-only loan is an adjustable-rate loan with an initial fixed period when only interest is due. They are typically available in 5-, 7- or 10-year terms.

Economists blame interest-only loans for the foreclosure crisis citing they were issued too freely. Today, interest-only loans are more difficult to obtain. Borrowers were using interest-only loans to qualify for a more expensive home and when the interest-only term ended the payment went up leaving many homeowners unable to afford the mortgage payment.

Interest-only loans are now being used by wealthy borrowers as a financial tool to help them manage irregular cash flow, reap a tax benefit, or free up cash for investment elsewhere.

Lenders that offer interest-only loans have strict qualifying standards. They generally require 30 percent equity in a property, and a minimum FICO score of 720. Lenders also look at the ability to pay back the loan is based on the fully amortized payment, not the interest-only payment.

 

 

First Time Buyer Home Loan Tips


Buying your first home can be confusing. Securing a mortgage is one of the most important parts of the home buying process. Making sure that you have the right loan and have chosen the right loan officer are among the things a first time buyer has to do to start the process. Here are some more tips on how to ensure a successful purchase:

1. Make sure your deposit is in order. Talk to your loan officer about what amount of a deposit is required for the purchase and type of loan. You will also want to make sure the funds are accounted for and readily available. You can expect deposits to run anywhere between 3 and 20 percent of the purchase price.

2. Plan to have a cash reserve in addition to your deposit. You may want to have a reserve of at least two months mortgage payments.

3. Ask your lender to go over all the fees that apply to the purchase. It is better to be prepared and know how much the actual purchase will cost. These costs are typically added into your loan but there may be some out of pocket expenses too.

4. Consider how much you can comfortably afford not how much you have been approved for. These numbers may vary considerably. Your mortgage costs should not be more than 30% of your household income.

5. The lowest rate is not always the best deal. You will want to look at not only the rate but also the terms and fees associated with the loan.