If you are thinking about purchasing your first home, you are probably very excited. Buying a home for the first time is a big accomplishment. Being a homeowner has many benefits that are not necessarily available to people who are renting. When you are a homeowner, you have the ability to paint the interior walls the colors you like and also remodel the kitchen and/or bathrooms if you so desire. But being a homeowner means more than just interior and exterior decorating. Being a homeowner means you are the owner of a valuable asset!
Will You Be Purchasing Your Home With a Mortgage?
When you’re about to become a first time homebuyer, you may quickly realize that the buying process can be somewhat overwhelming. There are many steps involved, and depending on where you are looking to buy, the process can be quite long. However, there are ways to make your experience as pleasant and as hassle-free as possible. Primarily, you want to make sure you work with an experienced and professional real estate agent as well as an experienced and professional mortgage lender.
Both your real estate agent and your mortgage lender should take the time to explain things, step by step, as you look for a home, apply for a mortgage, and make an offer to buy a property.
Following are some terms that may come up during the buying process and mortgage application process. If you’d like more information on any of these, make sure to talk with your real estate agent or mortgage lender.
Mortgage Interest Rate: Your mortgage interest rate is the rate of interest that you will pay on your loan. Interest rates can be fixed or adjustable.
Home Appraisal: Mortgage lenders require a home appraisal so they have proof of the home’s value. A home appraisal consists of an evaluation of the property’s value by a professional home appraiser.
Good Faith Estimate: A good faith estimate is an estimate of the fees that you must pay your lender in order to close the loan. Mortgage lenders must provide a good faith estimate to the borrower within three days of the submission of the loan application.
Real Estate Closing: A real estate closing is the point in time in which the purchase of a property is made final and official.
Down Payment: A down payment represents a percentage of the full price of the property that is paid by you in a lump sum.
Escrow: A mortgage company collects money from borrowers that is above and beyond the principal and interest due from the borrower each month – which is held in escrow. The mortgage company uses escrow funds to pay the borrower’s property taxes. Sometimes, escrow is also used to pay homeowner’s insurance premiums.
There are dozens of other terms that are commonly used during the home buying process. Your real estate agent and mortgage lender should explain uncommon terms and phrases to you in full detail if you have questions.