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Generally speaking, you can purchase a home with a value of two or three times your annual household income. However, the amount that you can borrow will also depend upon your employment history, credit history, current savings and debts, and the amount of down payment you are willing to make. You may also be able to take advantage of special loan programs for first time buyers to purchase a home with a higher value. Give us a call, and we can help you determine exactly how much you can afford.
Fixed-rate mortgages feature a non-changing interest rate. With a fixed-rate loan, the principal and interest portion of your monthly mortgage payment do not change; however, real estate taxes and homeowners insurance costs may change from year to year, resulting in a higher or lower monthly payment.
Advantages: Fixed-rate mortgages are beneficial for you if your income is not rising rapidly, and you want the comfort of knowing the principal and interest portion of your mortgage payment will not change.
Disadvantages: The downside of fixed-rate mortgages is that they typically have a higher interest rate than non-fixed-rate mortgages.
You assume some of the interest-rate risk that the lender normally assumes on a fixed-rate mortgage. For taking this risk, you would usually receive a lower initial interest rate than the fixed-rate mortgage’s interest rate.
Advantages: A lower interest rate means a lower monthly payment. The point at which the payment can be changed varies by the program you choose. It can range from one month to more than five years. Typically, the shorter the period before a change can occur, the lower the initial interest rate. Non-fixed-rate mortgages are a possible option for borrowers who are comfortable with their ability to handle payment increases.
Disadvantages: The trade-off with the non-fixed-rate mortgage is that, beyond increasing costs for taxes and homeowners insurance, the interest portion of your monthly payment also increases.
To keep monthly payments as low as possible, some lenders offer interest-only mortgages. These loans typically do not require any principal payments for a set period of time. Typical interest-only time periods are 5, 7 and 10 years.
Advantages and disadvantages: Since you are not paying off any principal, your monthly mortgage payment will be lower. The downside is that you are not building equity. Also, depending on the loan structure, you may face a very significant payment increase once the loan begins to amortize (the time your payments must be sufficient to cover both principal and interest).
A borrower would want to refinance his current mortgage to in essence lower his monthly payment and take advantage of lower rates. A refinance is also done so as to lower the amortization of one’s current loan. As an example – Assume a person had a 30 year mortgage whereby he paid 5 years on it – They may want to take advantage of utilizing a 15 year fixed and save 10 years of payments while at the same time lower their rate
This product is utilized to take cash (based on the equity available) from one’s home – This is done for a multitude of reasons- Renovate a home, pay off high interest debt, investment opportunity, etc –
An index is an economic indicator that lenders use to set the interest rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-specified margin. Three commonly used indices are the One-Year Treasury Bill, the Cost of Funds of the 11th District Federal Home Loan Bank (COFI), and the London InterBank Offering Rate (LIBOR).
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. Liberty Mortgage Lending II can help you evaluate your choices and help you make the most appropriate decision.
The amount of cash that is necessary depends on a number of items. Generally speaking, though, you will need to supply:
In many real estate transactions, the term ‘contingency’ may come up. A contingency is a clause that is added to the contract that gives either party the right to back out of the contract under certain circumstances that must be negotiated between the buyer and seller. Essentially, a contingency clause allows either the buyer or the seller to back out of the sale without any kind of repercussions or breach of contract.
Below is a list of the 3 most common contingencies that could come up in your next home sale or purchase.
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