Mortgage Questions – Having a home to call your own remains a popular goal among many Americans. Some individuals and families may prefer the flexibility and financial manageability of renting a place, but for others, it just makes sense to invest in the permanence of home ownership.
If your sights are set on purchasing a house for yourself or your family in the long run, there are important considerations to keep in mind, primarily in the area of finances. A quality house that fits your lifestyle and vision comes at a price, and you need to be prepared to meet all the financial obligations that come with your dream home.
“To help you better understand the kind of financial responsibilities involved, provided below are four common mortgage questions answered by the industry professionals.”
Mortgage Questions: How do I know when to buy a home?
It takes a certain level of emotional and financial readiness to declare that you can take on the commitment to go through the home buying process. Generally, you’ll know that you are ready to buy a house when:
- You know that you’re staying put. You must be sure that you will be staying in a single location for a minimum of five to seven years (of course, longer is much better).
- You’ve had a thorough discussion with a mortgage professional. It’s important to be preapproved for a loan, regardless of whether you’re a first-time home buyer or a more experienced investor.
- You have enough set aside for a down payment and things like moving expenses, home maintenance and emergencies. You may have obtained a loan, but you’ll still need readily available cash to cover all the associated costs.
Mortgage Questions: How much can I afford?
When purchasing a house, it’s best to choose one with a value that is about two or three times your annual household income. Getting in touch with mortgage specialists will help you determine how much the right house for your needs should be depending on various factors like available loan programs, your savings, credit and employment histories, current debts, and others.
Mortgage Questions: What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage?
With a fixed-rate mortgage, you pay the same interest rate throughout the entire life of the loan — the payment does not change even if interest rates rise. This type of loan typically comes in 15- or 30-year terms.
With an adjustable-rate mortgage, you initially get a fixed below-market interest rate, but this can fluctuate depending on the movement of market interest rates — they can increase or decrease over time. It can therefore be difficult to predict how much your monthly payments will be.
Mortgage Questions: What costs must be paid?
Basically, you will need to pay a deposit when you make an offer on the house (this is called earnest money), a percentage of the home’s cost due at the time of settlement (your down payment for the house), and the costs involved with processing the paperwork that comes with purchasing the house (these are called closing costs).
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