by Vince Liuzzi
Executive Vice President and Chief Banking Officer, DNB First
If you choose the former, your real estate professional will instantly hit you with a barrage of pressing questions:
Which city or town?
How many bedrooms?
Will you buy or build?
House or condo?
How much can you afford?
Once you find your new home, you’ll be faced with more difficult decisions including one of the most important ones:
What kind of mortgage do you need?
To answer that, you’ll want to pose questions of your own to your mortgage lender:
What type of loans do they offer? For example, if this is your first home, you may want to know if they offer first-time home buyer programs or affordable mortgage programs that offer more flexibility with credit and down payment requirements. Also, find out what terms they offer on both fixed- and adjustable-rate mortgages.
What are their rates? The lender must be able to tell you the annual percentage rate (APR) on a particular mortgage, which will reflect the interest rate, points, and fees they charge.
How much must you put down on the home? Most lenders require a down payment of anywhere from 3% to 5%. Keep in mind, however, that if you put less than 20% down, you may be required to pay private mortgage insurance (PMI), which increases the amount of your monthly payment.
What are the qualifying guidelines? In order to ensure you qualify for a loan, you should know the income, employment, credit, and other guidelines the lender requires. Keep in mind that some programs and lenders offer more flexible underwriting requirements. You should also ask the lender what documentation they require as part of the application process.
Will there be a prepayment penalty? In order to reduce the amount you owe on your mortgage, you may want to pay more than is required each month. You should check with your lender beforehand to ensure they don’t charge penalties for prepayment.
Here to help.
At DNB First, our knowledgeable mortgage loan officers can answer all your inquiries and help you find the perfect home. No question.