Financing for Dummies!

The fear of rejection, the horror stories from friends, and the general mistrust of mortgage companies have made the process of getting a loan more intimidating than it actually is!

The key is education! If you know what to expect, you will know when something doesn't seem right. There are 3 costs that are associated with buying a house: the down payment, the closing costs, and the prepaid expenses.

1. The Down Payment amount is determined on what kind of loan. Remember FHA still only requires 3.5% down.
2. Closing Costs are the fees associated with getting a mortgage. These fees include the mortgage and title company fees, the appraisal, credit report and attorney fees. If they say no closing costs, be wary. But be aware that some fees can be absorbed in the loan or paid by the seller but the fees are still there.
3. Prepaid Items would include prepaid interest, property taxes, homeowners insurance. These fees are dependent on what kind of loan you are getting in setting up an escrow or not having one.

Since we have fewer loan options than we had in the past, there are still two main loans, FHA and VA which are government loans, and Conventional loans. There are fixed rates and adjustables but with interest rates so low, there is no need for adjustables. We are seeing a few second loans to go with the first lien to make up a 80% loan value, but with PMI (private mortgage insurance) and MIP (Mortgage Insurance Premium on FHA) are now both deductible costs as they were not before.

A Professional Realtor can guide you to a qualified and helpful lender for your loan. Call us for references!