- Posted by: steve
- Category: mortgage articles
Before signing loan documents it’s important for all mortgagors to ask their mortgage specialist these 5 questions.
Looking to become a homeowner? Tired of being a renter? Have you found your dream home that you’re ready to make your own?
Buying a home is a big step in life.
Your mortgage decision is one that will stick with you for years. But, before signing the documents and sealing the deal, you’ll want to ensure you are making a wise financial decision.
Keep reading for 5 questions to ask your mortgage specialist.
5 Questions to Ask Your Mortgage Specialist
Throughout the home buying process, you’re likely to have a lot of questions. Here are five questions that you’ll want to ask.
1. What is the Interest Rate?
The interest rate of your mortgage loan will impact your monthly payment. Interest rates are based on various factors, including:
- Type of loan
- Loan amount and term
- Credit score
- Home location
- Down payment amount
A mortgage with a lower interest rate makes for a smaller monthly payment. As a buyer, you don’t have much say in the interest rate that a lender gives you.
If you have a low credit score, now is the ideal time to give it a boost.
2. Is the mortgage fixed-rate or an ARM?
There are two main types of mortgages: fixed-rate and adjustable-rate mortgages (ARMs).
Fixed rate mortgages have the same interest rate throughout the life of the loan. The life of these loans can range from 10-30 years.
ARMs have an interest rate that lasts for a set period. After that initial period, the interest rate can change.
These loans typically have lower interest rates. However, they are riskier as the rates can increase, which means a higher monthly payment.
Ask your mortgage specialist which loan is most ideal for you.
3. What is the monthly payment?
Before applying for a mortgage, know your buying power. Create a budget and determine how much money you can put towards a mortgage payment.
Remember that your monthly payment is more than just the cost of the mortgage. You’ll also be paying for:
- Home owners insurance costs
- Property taxes
- Mortgage premium insurance
Be sure that your mortgage doesn’t leave you broke. You should still be able to live comfortably and put money towards short-term goals. Don’t allow yourself to become house poor!
4. What is the minimum down payment for the loan?
The type of loan you choose determines the down payment amount. Most traditional mortgages require a 20% down payment.
Don’t have the money for a down payment? You can apply for an FHA loan, which requires a 3.5% down payment.
You can also look into 0% down payment loans, such as a HUD loan. Some financial institutions also offer this type of loan. Be aware that the smaller the down payment, the higher your monthly payment will be.
5. What fees are associated with the loan?
Depending on the loan, there may be one-time fees you’ll have to pay. These fees are known as points and must be paid at closing.
It also means that more of your payment goes towards the principle balance of the loan.
Your Home Buying Specialists
Looking to buy a home? Want to refinance your existing mortgage loan? If so, New Florida Market is the company for you.
We are experienced mortgage professionals that know the ins and outs of home buying. You can count on us for a first-class mortgage that fits seamlessly into your budget.
Contact us today to get started towards owning the home of your dreams!