Here are some of the common questions we hear about buying and financing a home.
Buying a home gives you a good investment that usually increases in value. You may also like the security of having a place of your own and the sense of community that comes from living in a neighborhood. The amount you pay for your mortgage each month may be lower than your rent. And you may also enjoy decorating and landscaping your home, along with relaxing in the privacy of your own yard.
While the price of a house may look intimidating, when you spread payments across 15 or 30 years, it can be surprisingly affordable. But your monthly mortgage payment is just one of the costs of buying a home. You also need to factor in home insurance, utilities, and maintenance costs. All together, they should add up to no more than about 28% of your monthly income, after taxes.
The answer depends on your income, your credit score, the amount of other debt you have, and how much you may have saved for a down payment. If you’re not sure, we welcome you to give us a call. One of our loan officers will be happy to sit down with you to review your eligibility for financing and put you on the right path in case you’re not quite ready.
This three-digit number represents your financial health. It’s based on factors like your payment history, how much you owe, and the length of your credit history. Scores range between 300 and 850, and the higher the score the better. Lenders use this number to decide whether they will offer you a loan, and if so, what the interest rate will be.
We work with people just like you every day, and we’re proud to say that we’ve helped thousands of you prepare for home ownership by going over the eligibility requirements for a loan. If your score isn’t where you want it to be, give us a call. We can help go over credit related guidelines to prepare for getting a home.
This is the informal process we use to help you estimate how much you can afford. Using your income, existing debt, and estimated down payment, we can give you a good idea of how much you can afford to spend on a home.
During this detailed process, we will review all of your financial information and credit score and make a conditional commitment to lend to you. Having a preapproval agreement in place when you make an offer on a house can improve your chances of having your offer accepted.
Expect to provide W-2 forms, tax returns, pay stubs, bank statements, and the amount of your current debt on cars, student loans, and credit cards. We’ll also use your Social Security number to look up your credit score. Other documentation may be required based on your finances, so contact one of our licensed loan originators for more details.
Yes, processing your loan is a service, and closing costs pay the companies that provide that service. We will tell you your closing costs ahead of time. In some situations, the seller may be willing to pay closing costs to help reduce your out-of-pocket expenses.
Usually, yes. A down payment is typically required to get a home loan; however, some programs offer over 100% financing.
Conventional loans often require 3-20% of the asking price, but FHA loans may accept much lower down payments. Remember that any down payment you provide will reduce your monthly payments. Please talk to us about your best option.
If your down payment is less than 20% for a conventional loan, you may be required to pay for this insurance in an upfront charge, or as a regular charge on top of your monthly payment. This insurance protects the lender in case you are unable to continue making payments, but it offers no protection to the buyer. PMI can be cancelled once you have 20% equity in your home.
Equity is the part of your property that you own. When you first get your mortgage, your equity is the same as your down payment. It goes up as you make mortgage payments and/or property values rise.
Our rates vary according to the market, your credit score, and the length of your loan. The lower the rate, the less you will pay over the life of your loan. Rates change all the time and Ameritrust commits to offering a fair interest rate that can be locked in at any time throughout the application process.
The interest rate is fixed for the life of the loan, regardless of what rates do over the life of your loan. This ensures that your payment remains the same each month, which can make budgeting a lot easier. However, if your loan has an escrow account that is collecting for taxes or insurance, that likely will change over time and cause your payment amount to change annually.
The interest rate changes periodically by adding what’s referred to as a “margin” to an index specified in mortgage documents. These two numbers are combined to create the loan’s interest rate and often times have limits (sometimes referred to as “caps and collars”) that ensure the rate does not increase over a certain amount over the life of the loan. As an example, a 1-year ARM will adjust every year, typically on the anniversary date of the loan. Because the rate changes as the index changes with fluctuations in the market, monthly payments on an adjustable rate mortgage loan likely will be different every year. However, if you are planning on being in your home a short period of time, an ARM may be a very good option with a lower interest rate.
Use our handy mortgage calculator for an estimate. You can plug in the asking price of the house, your planned down payment, the interest rate, and the number of years you’ll take to pay it off. Then experiment with different numbers to find an option that works for you. Remember that this number does not include the cost of insurance, property taxes or utilities, which you may not have paid with a rental, so leave room in your budget for those along with any needed repairs.
Yes! Doing so will help you save money by lowering the interest you pay on your loan. One simple way to do this is to divide the cost of your monthly mortgage payment by 12, and then add that amount to what you pay every month to help reduce the principal (the amount you borrowed). Please note: Amerifirst Financial Corporation does not accept payments every two weeks.
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