Mortgages

 

Mortgage Pre-Approval

Before conducting a comprehensive home search you must determine your budget. (basically, what you can afford) Mortgage pre-approval is an important first step that a lot of people hesitate to take. It is a simple ten minute phone call, Free of Charge, and requires no commitment from you, and:

 

In 24 hours you will know the price range of homes that you can afford!

 

I can not emphasize enough how important this first step is. I have spoken to people that have been "shopping on line" for months, only to find out in the end they should have been looking at different prices ranges. Some have been able to afford more, some less. But they all missed the critical first step :

Speaking to a Qualified Mortgage Expert!

Jim -- I Need to get Pre-Approved 

 

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How Mortgages Work

The modern mortgage market offers a variety of mortgage loans catering to the needs of homebuyers. The titles and details of these plans can become confusing, especially as new types are introduced continuously. You can make sense of these loan types, however, if you understand the basic principles that govern all mortgage loans. Again, you can look to your real estate professional for assistance.

 

Contact Jim to discuss the mortgage process

 

Basic Principles of all Mortgage Loans

  • The home is used as security to back up the loan. A lender can force sale of the home if the borrower defaults by failing to make scheduled payments.
  • The larger the loan compared to the value of the home, the more risky for the lender and, often, the more expensive the loan will be.
  • Interest earned by the lender always is equal to the periodic interest rate times the outstanding principle balance of the loan. The periodic interest rate is the annual interest rate divided by the number of payments in the year (usually one per month).
  • The required payment usually is a bit larger than the interest due so that some of the loan principal is repaid with each payment. This process is called Amortization and is why most mortgage loans can be retired when all the monthly payments have been made.

 

All mortgage loans have one of the following features:

  • Fixed payment and fixed interest rate - fixed rate mortgages
  • Fixed rate but variable payment - graduated payment mortgages
  • Variable rate and variable payment - adjustable rate mortgages

As you learn more about the types of financing available, you will notice that some loans appear to have more favorable terms. That may indicate that those loans are, indeed, bargains (and it does pay to shop around), but usually it means that those loans could have some feature that is less appealing to borrowers. For example, shorter-term loans often have slightly lower interest rates compared to longer-term loans. However, the monthly payment for the same amount of principal may be higher because of the shorter term. Variable rate loans usually have much lower interest rates to compensate for the risk the borrower accepts that interest rates will rise in the future.

 

Contact Jim to review the entire home buying process

      

  

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