The house buying process is both exciting and scary. I am not there yet… mostly because I can’t afford it. But becoming a homeowner can be one of the most rewarding life experiences. Just think about it for a second, you start saving for a place of your own, not a house but a home. Then you go on the hunt and view house after house to see which one makes you say; “This is it!!” Next thing you know you are off to complete the buying and mortgage process and finally you are given a set of keys… your keys… to your home. How could you not smile? How could you not be proud that you set out to achieve something, and you did it!
So, what are the steps we need to take to achieve this amazing feeling? First things first, we need to know and understand what the road to being a homeowner is, so we need to know the basics.
For starters, when looking to become a homeowner it’s important that you start the saving process earlier rather than later. The more money you can save, the more it will help you later on down the road. For instance, many buyers want to have a down payment of at least 20% of the purchase price in order to avoid monthly mortgage insurance fees. That could be a lot of money depending upon what you are looking to buy, so the more you save… the more you can put down which in turn will help lower your monthly payments.
Always be prepared for the extras! You never know how your purchase deal is going to go and you never know which fees might pop up during the process. Be sure that you are saving more money than you anticipate so you are not left at the closing table counting pennies.
Use your trusted Florida Credit Union! That’s us!
Tropical Financial is here to help you know and understand the true cost of a mortgage. Whether you are already involved in the home buying process and you are looking for the best home loan options in Florida or you are looking to get started, we can help you figure out how much home you can afford.
One of the many services that we offer our members is our Home Advantage Program. This program allows you to explore the housing market right from your computer, have access to a top of the line real estate agent and the Home Advantage Program will even give you a credit back towards your closing cost. Who doesn’t love a rebate?
Another great perk of being a member with Tropical Financial is we are going to work with you to get you the best home loan options and we will be there to ensure you know and understand the true cost of a mortgage.
You need to be prepared! That means before you start the home purchase process, check out your credit report and your credit score and see where you can improve. Do you have bills in collections? Pay them off. Do you have tons of late fees? Get up to date on those payments. Did you find fraudulent activity reported? Dispute that and get it cleaned up! By taking the time to view your credit report you can keep the home buying process smooth and easy. Oh and during the home buying process NEVER EVER apply for a new auto loan, or take out a loan or even open up a store credit card. These things can prevent you from closing on your new home.
There are several types of mortgages to know and be aware of before you start the home buying process. The most common ones are fixed-rate and adjustable mortgages
Fixed-rate mortgages – These are mortgages that come in and many shapes and sizes. Fixed-rate mortgages are a lower interest rate mortgage that remains constant over the life of the loan. The most company fixed-rate mortgages are the 30-year and the 15-year. There are several differences between the two but the major difference is how long you pay on the mortgage. Are you making higher payments to pay it off in 15-years or are you payments lower because you don’t mind a 30-year loan?
Adjustable-rate mortgages (ARMs) have a period of fixed interest, but after that the payment changes with whatever index the loan is based on. The period of fixed interest may be three, five, or seven years. With a 5/1 (the first number stands for the number of years in the initial fixed period, while the second indicates how often the new rate will adjust) ARM, for example, the initial interest rate remains fixed for the first five years, and then adjusts annually for the remaining term.
There are several types of caps that may apply to an ARM: an overall cap limits how much the interest rate can increase over the life of the loan; a periodic cap limits the amount the interest can increase from one period of adjustment to the next; and a payment cap limits the amount the monthly payment can increase at each adjustment.
While ARMs are less secure than fixed-rate mortgages, they tend to have lower initial rates and therefore lower monthly payments. They can be a good option if money is tight in the early years, as long as you are confident you can meet future interest and payment increases.
You’ve taken the time to start saving and preparing for the mortgage process but what’s next? The first thing you should do is speak with a Tropical Financial Mortgage Loan Officer. They will sit down with you and explain the home buying process as well as what type of mortgage is best for you and your budget and, they will also help you find a qualified Real Estate Agent with our Home Advantage program. But more than anything, they will be there for you throughout the entire home buying process.
Contact a Tropical Financial Mortgage Loan Officer today to get you started on the home buying process and be sure to check back as we share ways to help you make your dream of owning a home come true!