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Mortgage 101
From a "Realtor Magazine" article. |
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How much money do I have to come up with to buy a home?That depends on a number of factors, including the cost of the house and the type of mortgage you get. In general, you need to come up with enough money to cover three costs: 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; the down payment -- a percentage of the cost of the home that you must pay when you go to settlement; and closing costs -- the costs associated with processing the paperwork to buy a house.When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment of the closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money varies. The more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. Closing costs -- which you will pay at settlement -- average 3-4% of the price of your home. These costs cover various fees and lender charges and other processing expenses. When you apply for your loan, your lender will give you an estimate of the closing costs, so you won't be caught by surprise. |
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| Another kind is an adjustable rate mortgage (ARM). With this kind of mortgage, your interest rate and monthly payment usually start lower than a fixed mortgage. Your rate can go up or down as often as twice a year with this type of mortgage. 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 is lower. Talk to your real estate broker about the various kinds of loans before you begin shopping for a mortgage. |
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What will my mortgage cover?Most loans have four parts: 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 required by most lenders) and property taxes (the annual city/county taxes assesed on your property, divided by the number of mortgage payments you make in a year).Most loans are for 30 years, although 15 year loans are available, too. During the life of a loan, you'll pay far more in interest than you will in principal -- sometimes two or three times more! Because of the way the loans are structured, in the first years you'll be paying mostly interest in your monthly payments, paying mostly principal in the final years |
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What do I need when I apply for a mortgage?You should have:
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Important Topics and Links: |
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• Welcome: Short Hills, Millburn, Maplewood, South Orange, Summit, Mountainside, Springfield, Westfield, Chatham, Montclair, Livingston, New Providence, Berkeley Heights, New Jersey Homes and Real Estate - Rosa Tarantino your Expert Real Estate Agent. |
• Neighborhoods Take a look at some New Jersey Towns, History, Demographics, and more of the things you need to make a decision when you are looking for New Jersey Homes and Real Estate. |
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| • Contact Rosa: Contact Rosa Tarantino, your expert realtor in Short Hills, Millburn, Maplewood, South Orange, Summit, Mountainside, Springfield, Westfield, Chatham, Montclair, Livingston, New Providence, Berkeley Heights, New Jersey |
• Property Organizer The Property Organizer allows you to save property listings and your search criteria and to manage your Email Update service in one convenient location. |
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| • Search for New Homes: Search using theGarden State Multiple Listing Service System. |
• Marketing Action Plan: 20 Points of difference that lead to success! |
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| • Who is Rosa Tarantino: My pledge to my clients is to achieve and provide superior customer service. I am dedicated to providing unrivaled performance and excellence in each and every transaction that I manage. |
• Free Home Valuation Request a Market Study of homes comparable to your own, find out how much homes in your area have sold for with MLS Market Check. |
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| • For Buyers: A small compilation of info you need when buying a house |
• For Sellers: A small compilation of info you need when selling a house |
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| • Home finder: Links to help you find your dream home! |
• Links: Links to local area chambers of commerce, Local vendors and other websites that may be helpful to you. |
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