Home Mortgage Basics
This is a good time to buy a home, because mortgage rates and real estate prices have fallen to very attractive levels. However, lending norms have become very strict and you will only be able to qualify for the lowest home loan mortgage rates if you have a high credit score.
Home mortgage lenders will ask you to provide documents that prove your income and employment history, and will examine your application very carefully.
Mortgage lenders are flooded with home refinancing applications from people who want to take advantage of the low mortgage rates.
You can use an online mortgage calculator to find out how much you can afford to borrow, and to assess the different financing options.
Talk to several home mortgage brokers and lenders and ask them to provide quotes in writing, which include all the costs associated with the mortgage. Take notes, so you will be able to remember important details.
A fixed mortgage rate will protect you from future increases in monthly payments, while a lower, variable rate may be preferable if you plan to sell the home within a few years.
You will have to pay points, which are fees paid to lenders. Points are usually linked to the home mortgage loan rate. Normally, you will get a lower mortgage interest rate if you pay more points, and the opposite may also be true.
You will have to pay fees of different types, which may include broker fees and underwriting fees. Settlement, transaction, and closing costs may also be applicable. Lenders may ask you to pay about 20 percent of the purchase price of the home, as a down payment.
If the down payment is less than 20 percent, the home mortgage company may ask you to buy Private Mortgage Insurance, which covers lenders against default. A lower down payment may be offered when government-assisted programs like those of the Federal Housing Administration (FHA), Veterans Administration (VA), and the Rural Development Service, are available.
Many of these costs and fees are negotiable, so ask lenders if they will improve on the offers you have received from others. You may be able to negotiate a better new mortgage deal by getting lenders to compete for your business.
We can help you to get free quotes from highly regarded mortgage companies, with a few clicks. There are no costs or commitments involved at all and we will not give your contact details to anyone without your authorization. Find out about how we can help you now!
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