Homebuying 101: All About Financing

Homebuying 101 Series

There are several types of loans available when financing a home. What is most important is finding the one that works for your financial and personal/family situation.

  • There are different loan options to consider. The most common are the fixed-rate mortgage loan and the adjustable-rate mortgage (ARM). With the fixed-rate mortgage, your interest rate will never change, regardless of what the economy does. The adjustable-rate mortgages (ARMs) have interest rates that adjust periodically during the life of the loan.
  • Calculate how different rates will affect your monthly payments using a mortgage calculator.
  • When calculating monthly payment, be sure to consider PITI (principal. interest, tax and insurance).
  • Shop around for a mortgage lender or use the builder’s preferred lender.

Lenders Should Be Offering The Best Possible Loan They Can

A good lender will:

  • Offer local approval and won’t have to send your application to another state, which could lead to additional requirements.
  • Offer competitive rates and be open to compare with others lenders.
  • Be reliable and communicate deadlines and necessary information to you.

INSIDER TIP: To help make your purchase smoother and quicker, we recommend getting a mortgage pre-approval instead of just a pre-qualification. A pre-qualification is just an estimate of what you can afford and a pre-approval provides more detail and accurate information about how much you can exactly afford. The lender will review your income documents for the pre-approval and ensure that you are accountable and ready for the purchase. Oftentimes, this can make you a stronger candidate to the seller.

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