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Understanding Your Financing Options
Understanding Your Financing
Options
Choosing a Loan
Here are some important questions to ask when
shopping for a home loan:
-
Is the loan
assumable? Under what conditions can it be
assumed?
-
Does the rate
fluctuate? How?
-
Can the original
borrower be fully released? Is there a charge?
-
Is there a
pre-payment penalty? Is there a minimum
pre-payment amount? What happens if the loan is
paid off early?
-
Is there a Private
Mortgage Insurance (PMI) requirement? Can it be
removed? How?
-
Can taxes and
insurance be paid separately from the loan
payment? Can this arrangement be changed by the
borrower or by the lender? How ?
Down Payment
Options
-
Personal Savings
-
Gift Letter
-
Personal
Reserves/Sellable Assets
-
Home Equity
Joint Ownership
Your Sales Agent Can Help You Find Financing
We work with many mortgage brokers throughout the
area and can inform you of different financing
alternatives and help you arrange appropriate
financing.
If you need help
choosing an agent that suits your needs or if you
are looking for a particular realtor agent, please
contact
us.
Borrowing enough money
to buy a house can be intimidating. Your sales agent
can guide you through the process. Below is a
listing of some of your options when choosing a
lending institution, and deciding on what kind of
loan to obtain. Look over the information, and we
can discuss which ones might be right for you.
A Mortgage
A mortgage is a loan for the cost of the
property. The title is held by the lending
institution until you pay the loan back according to
its terms. The length of time you have to pay it
back, under what circumstances you can repay early,
the interest rates you pay for use of the loaned
money, and other terms, are all spelled out in the
contract for your mortgage. You will be expected to
put some cash money into your purchase, and you may
have to prove to the bank that you have enough other
money to make your payment. Some mortgages are
assumable, meaning the person you sell the house to
can assume your debt, and take over the loan
payments.
Down Payment
The down payment on your home will guarantee the
lender that it will not lose money if you fail to
pay your debt. The lender requires the mortgage to
be less than the value of the house, so that the
loan will be paid back if the house has to be sold.
The down payment makes up the difference between the
cost of the house, and the loan you can get to
purchase it.
The Conventional
Rate Mortgage
This is a mortgage with an interest rate that stays
the same until the mortgage is paid off. The exact
terms of repayment, and the specific interest rate
available at any given time, is variable. You can
call institutions to find out their interest rates,
or I can do it for you. I can also help you
calculate how much you can expect a bank to loan,
given your personal financial picture.
The Adjustable Rate
Mortgage (ARM)
An ARM is a loan with interest changing at different
periods of time. The rate changes may be
predetermined and fixed, or they may be based on
variable factors, such as the one-year Treasury
Security Index.
The FHA Loan
FHA loans are insured by the Federal Housing
Administration. This makes this a very low risk loan
for the lender. These loans are designed to
encourage lenders to make loans for residential
properties. The terms are also favorable for the
buyer, and are worth consideration.
The VA Loan
These programs offer long-term financing to eligible
veterans or their surviving unmarried spouses, with
little or no down payment required. VA loans are
guaranteed by the Veteran's Administration.
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