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How do I know how much house I can afford?

 

What is the difference between a fixed-rate loan and an adjustable-rate loan?

 

The general rule is that you can purchase a home that is 2 or 3 times your current annual income. The amount that you are permitted to borrow will also depend on your employment history, credit history, your savings, current debt, and the amount that you have to use as a down payment. Homestead Mortgage will help you determine exactly how much you qualify for as a home loan.  

With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an adjustable-rate mortgage (ARM), the interest changes periodically, typically in relation to an index. While the monthly payments that you will make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is by talking to us.

What does my mortgage payment include?

For most homeowners, the monthly mortgage payments include three separate parts:

- Principle: Repayment on the amount borrowed

- Interest: Payment to the lender for the amount borrowed

- Taxes & Insurance: Monthly payments are normally made into a special escrow account for items like hazard insurance and property taxes. This feature is sometimes optional, in which case the fees will be paid by you directly to the County Tax Assessor and property insurance company.

How do I know which type of mortgage is best for me?

 

There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Homestead Mortgage can help you evaluate your choices and help you make the most appropriate decision.

 

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How much cash do I need to purchase a home?

It depends on a number of items. Generally speaking, though, you will need to supply:

- Earnest Money: The deposit that is supplied when you make an offer on the house

- Down Payment: A percentage of the cost of the home that is due at settlement

- Closing Cost: Cost associated with processing paperwork to purchase or refinance a house. Keep in mind seller concessions are allowed on most loans, and some programs require no money down.  

 

 

What is PMI?

PMI is Private Mortgage Insurance. Generally speaking, a lender requires the amount financed above 80% to be insured in case of loss. Sometimes it may be better to have a loan with PMI if a lower rate can be secured. However, there are many programs designed to avoid PMI. There are some instances when the PMI can be tax deductible. Your mortgage specialist will help you to determine which way is most cost effective based on your scenario.

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