Mortgage Loans

Typically, it is suggested that you purchase a home with a value of two or three times your annual household income. The amount you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of your down payment. You may also be able to take advantage of special loan programs for first-time buyers and veterans in order to be able to purchase a home with a higher value. Contact one of our experienced Mortgage Specialists for help in determining how much you can afford.

The amount of cash that is necessary will vary, depending on your down payment and loan program. An FHA loan is a great choice for first-time home buyers because it requires as little as 3.50% down. Some conventional loans are also available with as little as 3.00% down. We offer VA or USDA loans which may finance up to 100% of the purchase price for those who qualify.

Generally, you will need cash for a deposit when you make an offer on the house, a down payment that is a percentage of the cost of the home and is due at settlement, and closing costs.

Private Mortgage Insurance (or PMI) protects the lender from losses that can occur when a borrower defaults on a mortgage. PMI is required on mortgages when the borrower has less than a 20% down payment (or less than 20% equity in a property being refinanced). The cost of PMI is typically added to the monthly mortgage payment. In many cases, PMI will stay in effect for 60 months or until the loan-to-value ratio is at or below 78%. An FHA loan carries PMI through the life of the loan.

Closing costs are expenses paid by the borrower in connection with the closing of the mortgage loan. Depending upon the specific loan, these expenses may include an application fee, origination fee, discount points, title insurance, attorney's fees, transfer taxes for purchase transactions, and pre-paid items such as tax and insurance payments.

The interest on a fixed-rate mortgage stays the same for the life of the loan. The interest rate on an adjustable-rate mortgage (ARM) changes periodically. While the monthly payments that you make with a fixed-rate mortgage are relatively stable, payments on an ARM loan will likely change. There are advantages and disadvantages to each type of mortgage, and the best way to select a loan product is to talk to one of our Mortgage Specialists about your options.

There are many mortgage choices and options available. The best type of mortgage for each individual depends on a number of factors including your current financial picture (such as funds available for down payment) and how long you intend to keep your house. Special loan programs are also available for first-time home buyers and veterans. Our Mortgage Specialists can help you evaluate your choices and make the most appropriate decision to suit your needs.

For most homeowners, the monthly mortgage payments include three separate parts: 1) Principal - repayment on the amount borrowed; 2) Interest - payment to the lender for interest on the amount borrowed; 3) Tax and Insurance - monthly payments typically made into an escrow account for items like hazard insurance and property taxes.