Commonly Asked Questions
Purchasing your first home may be the largest investment one will make in their lifetime. There is a huge shift from living with family or renting, to owning a home. It can be an overwhelming experience and at times you may feel that you are barely keeping in step with the process. The home buyer tips we offer here are insightful, especially for people just like you – first time home buyers.
Another kind of mortgage is an Adjustable Rate Mortgage (ARM). With this kind of mortgage, your interest rate and monthly payments usually start lower than a fixed rate mortgage. But your rate and payment can change either up or down, as often as once or twice a year. The adjustment is tied to a financial index, such as the U.S. Treasury Securities index. The advantage of an ARM is that you may be able to afford a more expensive home because your initial interest rate will be lower. Talk to us about the various kinds of loans before you begin shopping for a mortgage.
Principal: the repayment of the amount you actually borrowed.
Interest: payment to the lender for the money you’ve borrowed.
Homeowners Insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards.
Property Taxes: the city/county taxes assessed on your property.
The most common repayment period for home loans is 30 years, although 15 year loans are available, too. During the life of the loan, you’ll pay far more in interest than you will in principal – sometimes two or three times more! Because of the way loans are structured, in the first years you’ll be paying mostly interest in your monthly payments. In the final years, you’ll be paying mostly principal.
Earnest money – the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house.
Down payment – a percentage of the cost of the home that you must pay when you go to settlement.
Closing costs – the costs associated with processing the paperwork to buy a house.
When you write a contract on your new home, we will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the construction process, down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money usually varies.