Getting a mortgage can help you to purchase an item or asset that would otherwise be too heavy on the pocket if paid on the spot with cash. If you’re searching for a new home from among the many houses for sale in Charlotte, NC, understanding the nuances of a home mortgage can give you better options and a faster transaction with any mortgage provider.
Definition
A home mortgage works much like any standard loan in that you can pay in installment within a set time frame. There are also interest rates added to each regular payment that go to the mortgage lender. Home loans are more customizable, though, depending on several factors from your capacity to pay to the type of loan scheme you qualified for.
Window-shopping
Most financial institutions like banks include among their services the provision of home loans. Once you qualify for a loan, the mortgage lender will present you with a selection of home mortgages with varying terms. Before saying “yes” to the first quote you see, it is best to go “mortgage window-shopping” to find out who among the lenders you encounter will have the mortgage terms most amenable to you.
A portion, not all
When a lender approves an application for a home loan, that means that the lender is willing to help you with payment for a huge chunk of a home’s price tag. The down payment for the home is still shouldered by you, the borrower. This usually entails an average of 20% of the home’s actual value.
Loan programs
Most common loan programs preferred by US homebuyers are the following:
- Conventional. Most home loans are under this category because they don’t have the backing of any government institution. Plus side: They cost lower than FHA loans. Downside: Qualifying for one can be more difficult.
- FHA. Private lenders course funds through the Federal Housing Administration who, in turn, regulates this money and insures it. By borrowing funds via an FHA loan, down payment can be reduced to as low as 3.5%. Those with lower credit scores can also qualify for this loan scheme.
- VA. Available to everyone in the US military, including veterans and spouses of those who died or became incapacitated in the line of duty. Loans have no monthly premiums and there are additional clauses to protect the borrower from foreclosure in case of financial difficulties that may force them to default on their monthly dues.
- USDA. Available to those with very little savings from the rural areas, as this is offered by the US Department of Agriculture. Down payments are down to zero and they cost even lower than FHA loans.
Loan terms
The most common loan terms are the 30-year and 15-year terms. These are the consequences of choosing either term:
- 15-year term: shorter length of payment time, higher monthly dues, and – including premiums – a lower total cost.
- 30-year term: longer length of payment time, lower monthly dues, and – including premiums – a higher total cost.
Developments
The federal government, under the CARES (Coronavirus Aid, Relief, and Economic Security) Act, has come up with two venues for temporary relief related to home mortgages and rentals in the light of this COVID-19 pandemic. Click here for more information on mortgage forbearance and the eviction and foreclosure moratorium.
Providing great ideas on financing for a home is among the better qualities of our team at Valarie R. Brooks Real Estate. You can call us at 704.488.5458 or send us an email at Valarie(at)ValarieRBrooks(dotted)com to discuss the best way for you to get the home of your dreams.