First-Time Home Buyers FAQs

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Here are frequently asked questions to help first time home buyers purchase their first home. Please feel free to reach out directly to our loan officers for further explanation if necessary. We look forward to hearing from you!

On a fixed-rate loan, the interest rate doesn’t change over the life of the loan. An adjustable-rate mortgage (ARM) has an interest rate that is fixed for a set number of years and then will go up or down based on the market. If you’re thinking of getting an ARM, consider how long you plan to stay in your home. If you plan to stay in your home for a long time, a fixed-rate loan may be better for you. But, if you plan to sell your home before the rate becomes variable, consider an ARM because initial rates are typically lower.
Interest-only loans are not for everyone, and because of the risks, the pros and cons of an interest-only loan should be considered thoroughly. With an interest-only loan, borrowers make only monthly payments of interest for a set number of years before they begin to make principal payments. During this period, you won’t build any additional equity in your home unless the home appreciates in value. When the interest-only period ends, your mortgage payment will increase, often substantially, to ensure the outstanding principal balance is repaid before the loan term ends. If you are comfortable with managing the risks, an interest-only loan does provide some flexibility in managing month-to-month cash flow.
Contact us to get started with your mortgage pre-approval. We’ll get some preliminary information from you, review it and determine whether you might qualify for a loan. Once you get your mortgage pre-approval, you’ll know how much you could borrow and can look for a new home with confidence. Sellers will also feel more comfortable knowing that they have a serious buyer
An appraisal is a type of valuation developed by an independent, unbiased, qualified, and licensed or certified professional. Appraisals and valuations are opinions of the market value for the property used as collateral for the requested loan. Written reports of appraisals are sometimes referred to simply as "appraisals."
In almost all situations, a home appraisal will be needed. The appraisal helps a lender determine the market value of the home you are considering purchasing. Since the property will be used as collateral against the mortgage, lenders want to make sure the house is worth at least as much as the loan amount you’re seeking.
Market value is the likely selling price of a home with a willing buyer and a willing seller on the open market.
Lenders are required to provide applicants with all completed appraisals and written valuations related to their first-lien mortgage and home-equity loan and line applications.
A comparable sale is a property that has recently sold and is similar to the subject property in most respects, including size, location and amenities. The selection of comparable sales is an important determining factor in providing an opinion of market value. It is the appraiser's responsibility to adequately research the local real-estate market and to determine which comparable sales best represent the value characteristics of the subject property.
This is one of the most important mortgage questions. When you’re buying a home, the funds are available on the day you close your loan. On a refinance, funds are normally disbursed on the fourth business day after you sign your loan documents. This is because federal regulations require a three-day rescission period, during which you have the right to cancel your loan outright.
Points, also known as discount points or mortgage points, are a one-time fee that you can choose to pay to get a lower interest rate. One point equals one percent of your loan amount and will usually result in a rate that is one-eighth to one-quarter of a percent lower.
The interest rate is the cost to actually borrow the money disbursed in the loan. In addition to the interest, the APR (annual percentage rate) adds in some of the upfront costs of getting the loan, including points and lender fees.
Closing costs include items like title insurance fees, attorney fees, pre-paid interest and documentation fees – to name a few. These items vary for each customer due to differences in the type of mortgage, the property location and other factors. You’ll receive a Loan Estimate explaining your closing costs shortly after you formally apply for your mortgage. You'll also receive a Closing Disclosure before closing that will list all of the costs, credits and fees needed to complete the purchase of the home. It’s similar to the Loan Estimate however the costs have been finalized at that point.
In most cases when you are getting a mortgage to buy a home, you will need to pay some closing costs out of pocket. However, sometimes you can choose to accept an interest rate higher than what you would normally qualify for in exchange for a lender credit to offset a portion of those closing costs. This will result in a higher monthly mortgage payment, so you have to weigh the pros and cons to determine what works best for your situation. Speak to your Home Loan Originator about your personal circumstances to find the right solution.

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