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Definition
A type of loan you use to buy or refinance a home. In short a Mortgage is a way to buy a home without having all the cash upfront.
Mortgage
How Is My Mortgage Determined?
The amount of your mortgage loan will be based on what you can afford and the fair market value of the home, determined through an appraisal, as the lender cannot lend you an amount higher than the appraised value of the home.
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Your interest rate is determined by current market rates, as well as the degree of risk the lender takes to loan you the money.
General Qualification for Mortgage
Anyone who can’t pay the full cost of a home out of pocket. In order to qualify for a mortgage you must have stable and reliable income, a debt to income ratio less than 50% and a credit score of 580 for FHA (Federal Housing Administration) loans or a credit score of 620 for conventional loans.
Mortgage Process
LOAN PRE-APPROVAL
Getting pre-approved for a mortgage will allow you to know exactly how much you qualify for and keep you from wasting your time shopping for homes outside your budget.
SHOPPING FOR YOUR HOME & MAKING AN OFFER
Contact me, Jyothi Joseph a real estate agent and mortgage loan originator, to start looking at your potential dream homes. I will help you find the right home, negotiate the price, make the offer and handle all the paperwork to make the process as fun and stress free as possible.
GET FINAL APPROVAL
Once your offer is accepted your lender will verify all the details of your mortgage, including your income, employment and assets (if those details weren’t verified upfront), as well as verifying the property details. Typically an appraisal will be done on the home to confirm the value and condition as well. A title company will also be hired to check the title of the home and ensure there are no issues that would present issues to the sale..
CLOSING ON YOUR HOME
Lastly you’ll meet with the title company and me to take ownership of your home. At this time you’ll also pay your down payment and closing costs as well as sign the mortgage papers.
Mortgage
Dictionary
A lender is the financial institution that loans you the money to buy your home.
Lender
The amount you pay monthly toward your mortgage loan.
Mortgage Payment
A percentage of your loan amount that you’ll pay your lender each month as a fee for borrowing money.
The interest you pay each month is based on your interest rate and your principal.
Interest and Interest Rates
The individual seeking a loan to buy a home.
Borrower
How long you’ll be making payments on your mortgage loan. The most common terms are 30 years and 15 years. A longer term usually means lower monthly payments and a shorter term typically means larger monthly payments but saves you on interest.
Mortgage Term
Fixed interest rates stay the same for the entire length of your mortgage.
Fixed Rates
The money you pay upfront to purchase your home. Your down payment will vary based on the type of loan you’re getting but the larger the down payment is typically results in better loan terms and a cheaper monthly payment.
Down Payment
The amount of money you have left to pay on your loan after your down payment.
Principal
Adjustable rates are interest rates that change based on the market after the set length of a starting fixed rate. Most adjustable rate mortgages start out with a fixed interest rate period of usually 5, 7 or 10 years. During this time, your interest rate remains the same but once your fixed interest rate period ends, your interest rate will adjust up or down every 6 months to a year.
Adjustable Rates
Mortgage
Owning a home comes with added costs, a couple of which include paying for property taxes and homeowners insurance. To make it easier for you, lenders will set up an escrow account to pay these expenses for you. To fund your account for these payments, lenders will calculate these additional costs into your monthly mortgage payment. Note not all mortgages come with an escrow account and if your loan doesn’t, you will have to pay your property taxes and homeowners insurance bills yourself.
Escrow
