Starting your Home Buying Adventure with the Right Mortgage

by | Sep 12, 2014 | Loans

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Buying a home is a major life decision, and many factors go into the decision of how much home you can afford. Most people use a mortgage to buy a home. Mortgages are loans specifically for homes that come with a certain set of terms, rules, and regulations. It’s important to do a decent amount of research before committing to a home loan. Your new home is likely the biggest purchase you will ever make, and a home loan is an incredible, long term commitment. Mortgage terms very between lenders, so understanding what you are signing is very important.

When choosing a mortgage, pay attention to the settlement costs. Low interest is a good thing, but look at  the other charges and fees. You don’t want to automatically go with the lowest interest mortgage without looking at other details. This could result in higher out of pocket costs and having to pay more for your home in the long run.  Find out what optional charges are available, like credit insurance. Some of them you can disregard, but others may be beneficial to you. Ask if there are any prepayment penalties, like if you sell your home or refinance your loan. Escrow is also an important consideration for home loans. This is what pays insurance and property taxes. Find out if you’re responsible for that or if the lender takes care of it. Sometimes you have to put some money into an escrow account upfront.

The interest rate and annual percentage rate are slightly different concepts. The interest rate is cost of loan to the borrower. The APR tells you the cost of the loan over the life of the loan, including all fees. You need to be familiar with these terms so you know what you are paying for this loan. Also make sure you understand your closing costs. These may or may not be included in your loan.  The worst surprise at the end of a thirty year mortgage is a balloon payment. This is a lump sum payment at the end of the mortgage term.

Mortgage shopping can be confusing, overwhelming, and difficult to understand. Start with lenders like Village Mortgage, who can guide you in the right direction for buying your home. Once you have all the paperwork signed, the excitement will take over and you can happily begin to enjoy your new home.

©2014 Village Mortgage Company, NMLS #6331 =, CT #6331, RI #6331, Mortgage licensed lender in MA ML6331. This is not an offer to extend credit to any individual who may be entitled to a more complete disclosure per RESPA, TILA, HOEPA or any other more applicable federal, state or local law or regulation. Rates, terms, fees, products, programs and equity requirements are subject to change without notice. Village Mortgage, Equal Housing Lender.

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