While getting a new home can be exciting, getting a new mortgage, on the other hand, can beintimidating and confusing. Most new house buyers have a lot of the same questionsregarding the mortgage process. The following article goes over a few of those questions and their answers to help you along your home loan journey.
How Much Can I Afford to Spend on a New House?
This amount varies from buyer to buyer. Most people can find out how much they can afford by utilizing a mortgage calculator. You could also talk to a lender about getting a prequalification or a preapproval. Both items give you a better understanding of what kind of money you could be qualified to borrow when buying a new home.
Is There a Difference Between Being Pre-Approved and Prequalified?
There is a difference between preapproval and prequalification. While they are similar, their differences are significant enough that want to pay attention to them.
Prequalification is an estimate that the lender gives you that indicates the amount of money they might lend you if you have the documents to qualify.
Preapproval is the amount the bank guarantees that they can give you based upon prescreening and further documentation that you have provided them.
What DoesMy Monthly Mortgage Payment Include?
The answer to this question dependson if your mortgage has an escrow account. The typical mortgage that is not in escrow consists of the mortgage and the interest owed. If you are in escrow, your monthly payment could have a portion of your home insurance and annual property taxes included as well.
What is an Escrow Account and How Does it Affect My Mortgage Payments?
Escrow accounts are a type of mandatory savings accounts. Many lenders require homeowners to have escrow accounts to ensure that the homes insurance and property taxes are paid on time. Each month part of your home loan payment is set aside in your escrow account. When your home owner’s insurance policy comes due, the escrow company issues the payment. Your lender will also save another part of your monthly home loan in your escrow account for your spring and winter taxes. When your taxes are due the escrow company utilizes the money from the account to pay for your taxes as well.
How do I Determine What My Rate Will Be?
Most borrowers shop around and compare interest rates between lenders. Lenders determine what ratesto offerto an extent, but the housing market and the economy generally define a range that the interest rates will be in and then the lender provides an exact rate within that range per each loan. The following information can improve your personal loan rate.
Significant Down Payment
Shorter Loan Term
What is a Fixed Rate, and Do I Need One?
Having a fixed mortgage rate means that the original interest rate given to you on the day that you signed your home loan, will be the rate that you have for the life of your investment. This can give you a steady house payment as well as ensure that your home loan interest rate will not increase; however, this is not the only mortgage rate option available. Be sure to talk to your lender to determine what type of interest rate is best for you.
What is Private Mortgage Insurance, and Will I Have to Pay for it?
Private mortgage insurance (also known as PMI) is a fee assessed by your lender to help protect themselves and the property in which they have invested should you default on the loan. Most lenders only require PMI if a borrower has not put a 20% or larger down payment up for the house they are buying, and some mortgage programs do not even require PMI. Ask your lender if the program you are applying for will include PMI.
What are Closing Costs, and Do I Have to Pay Them?
Closing costs are a collection of different fees that are due upon the finalization of the mortgage. These fees differ for each borrower based on the fees each lender charges for various items. Also, there are cases where you can negotiate that the seller helps to pay for the closing costs or that your lender rolls those costs into your loan.
What Do I Need to Do to Start the Application Process?
The first step you need to take is to find a trustworthy lender. Here at Nationwide Home Loans, we offer some of the best mortgage rates in the Fort Lauderdale area and our loan experts are extremely knowledgeable and can walk you through each step of becoming a homeowner. Not only can weassist you with mortgage program selection, but we can also help you understand interest rates and which choice is best suited for you and your financial needs. Contact us today to find out more about getting a mortgage for your new Fort Lauderdale home!