Buying a home is a very complex and important thing for most people. There are numerous factors that go into the process, including budgeting and researching. When you’ve found a home that you want to buy, you may feel a little overwhelmed at the prospect of securing a mortgage for it. When it all comes down to it, you can go through the process on your own or use mortgage brokers to help streamline things. Regardless of the path you choose to take, there are still plenty of financial concerns to worry about as you work on acquiring your home. In this article, we’ll go through five financial concerns to consider while navigating the home buying process. Check it out below.
Down payments are an integral part of purchasing a new home. Knowing how much you need to put down is critical to not only securing your home but also determining other factors related to your mortgage down the line. Down payments are a sort of an investment into the future of the home. A 20% down payment means you won’t have to purchase private mortgage insurance. Down payment amount also helps determine the loan to value ratio as well.
There are myriad mortgage loans available to the average home buyer. The most likely is probably going to be the 30-year fixed mortgage. In this loan, home buyers receive a constant interest rate that remains the same throughout the loan term. It’s also a lower overall monthly payment, making it one of the better options for first-time home buyers and a very popular choice. Other options—like the 15-year fixed-rate mortgage—offer similar benefits, but on a shorter term. Because it’s a shorter term, payments will be a bit higher. They’re often used for refinancing instead of first-time purchases. Other mortgage loans include:
- Adjustable-rate mortgages
- FHA mortgages
- VA mortgage
- Jumbo mortgage
- USDA mortgage
- Interest-only loans
- Conventional mortgages (not backed by the government)
- Conforming mortgages (meeting loan limits set by the government)
- Government-backed mortgages (self-explanatory)
- Reverse mortgages
Working with a broker will help you determine what’s best for you, help you understand the pros and cons of each loan, and start the process of buying the home of your dreams. When you’re seeking mortgage loans in Virginia Beach, you’ll find a plethora of reputable finance professionals dedicated to helping you!
Mortgage rates are a tricky concept, even on the best of days. The Federal Reserve has a lot to do with determining rates, especially the bond market. Sometimes the Fed might cut interest rates, but this rarely affects existing mortgage rates immediately. It’s more of a slow burn that occurs longitudinally and incrementally. Moreover, calculating a mortgage rate can be complicated and involves understanding variables such as principle, interest rates, property taxes, and homeowner’s insurance costs, followed by some quick algebra. Thankfully, there are more than enough online calculators whose sole purpose is to help you figure out this equation. Mortgage brokers can help, too. They help clients find better rates, reduce fees, negotiate better values, and more, making them an invaluable asset for securing the best possible mortgage loan and rate for you.
As part of the mortgage costs equation, understanding property taxes is critical. They’re an important part of owning a home! Governments usually assess property taxes based on the value of the home, its locations, and myriad other factors critical to determining its value. There are a few ways to pay these essential taxes. You could have them placed in an escrow account as part of your mortgage statement (which are then paid out at the appropriate time) or you can pay them as you would income taxes during the year. It’s crucial to factor in the potential cost of property taxes when you are buying the home and working out the details of the mortgage loan agreement.
Cost of Home Inspection
Home inspections are an important step in the mortgage process. A home inspection helps insurance companies determine how much to insure your home for and can also help you uncover any potential problems with the home itself. The importance of a home inspection cannot be understated, and it should be one of the key considerations for getting all of your financial ducks in a row for buying a home. Sometimes, your mortgage broker can help you find a quality inspector who can help inspect your home before you buy it. But ultimately, the responsibility is yours to ensure there aren’t any dangerous, unsafe, illegal, or other issues with the home prior to making the final purchase.