 A home mortgage is the largest debt some people will incur in their lifetime, so understanding all the variables before closing is extremely important. Here are the basics:
Getting preapproved is a smart move to make, as it shows sellers a loan officer has reviewed your basic financial information and you are tentatively qualified to borrow a set amount of money. This shows you are a serious buyer when making an offer on a home. The preapproval process is preliminary and not subject to the scrutiny of actually qualifying for a mortgage. How Do Mortgage Interest Rates Affect Me? The mortgage interest rate is the most important component of the loan, since even one percentage point can mean a payment of hundreds of dollars more or less each month and thousands of dollars over the life of the loan. Mortgage interest rates are based on the economy, the borrower’s credit score and assets, the Federal Reserve rate, and the secondary mortgage market. What Are Discount Points? Borrowers can purchase discount points to lower the interest rate, with one point usually equaling about 1% of the loan’s amount. For example, two points on a $100,000 mortgage would cost about $2,000. If the original interest rate was 5%, the new rate would be about 4.5%, so purchasing the points would save the buyer $10,000 over the life of the loan. This makes sense for buyers who plan to stay in their home for a long time. What Is a Lien? A lien is an unpaid fee, such as a second mortgage, insurance, or taxes. Sellers must remove any liens before the mortgage company will close on the property. However, homes in foreclosure sometimes have unpaid liens, which would force the borrower to pay off any fees before purchasing the home. How Does the Secondary Mortgage Market Affect Me? Since mortgages are commodities with associated risks and rewards, lenders often sell them to other lenders. This selling and reselling does not affect the loan agreement in any way.
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 There’s so much to think about when house shopping. Most people focus on a home’s beautiful exterior, the kitchen, the number of bedrooms and bathrooms, and of course, whether they can afford the mortgage. But one of the most important considerations is whether the location is a good fit. Here are questions that will help you decide if a home’s location works for you.
Does the Neighborhood Seem Safe and Comfortable? Consider the character of the surrounding neighborhood. Look up neighborhood crime rates online or drive around during evening and nighttime hours to get a feel for the safety of the neighborhood. Are Family or Friends Living Nearby? If you have a strong relationship with your family, you should consider buying a home located close to your parents, siblings, or other relatives. If you have a lot of friends, it’s not possible to move near all of them, but you should think about where the home is located in relation to friends you see frequently. Is the Commute Manageable? Being near your workplace (unless you can work remotely) is one of the most important considerations when buying a home. After all, you will be driving there daily—a long commute can get old quickly. Check out the grocery stores, banks, and other neighborhood shops that are close by to see if your favorite places are easily accessible. Your future home should be located near the aspects of life that matter most to you—family, friends, shopping, and other amenities. Consider the character of the neighborhood and if it meets your expectations. If you find the perfect house but the neighborhood doesn’t fit your needs, you might end up with buyer’s regret. Ready to shop for your dream home? Contact me today. |