Redirecting to cart, please wait...
You have items(s) in your cart.
The mortgage interest rate will affect your monthly payment amount; generally, you will want to find the lowest interest rate possible. Be sure to ask, however, whether the lender is offering a fixed-rate loan or an adjustable-rate mortgage.
With a fixed rate loan, the interest rate will remain the same as long as you hold the mortgage. With an adjustable-rate loan, the rate can change based on the direction of interest rates in the credit markets.
Lenders usually charge fees for their mortgages. For example, most loans include points, which are typically based on a percentage of the loan amount. If you are charged two points on a $200,000 mortgage, say, that would amount to $4,000, or 2 percent of the loan amount.
Typically, a loan with a higher interest rate will charge fewer points. There may be other expenses associated with the loan, as well, such as broker or underwriting fees. Be sure to ask about any additional expenses and then calculate how they will affect your up-front costs or your monthly payments.
One of the negotiable elements in buying a home is how much money you will offer for your down payment. Many lenders require that you put down 20 percent of the home sale price as your down payment.
If you’re allowed to make a smaller down payment, the lender will likely require that you buy private mortgage insurance or PMI. If you are unable to keep up your mortgage payments, this insurance covers the lender’s costs. If you do need PMI to qualify for your loan, find out what the overall cost of the PMI will be and how long you will have to hold this insurance.
There are clearly many questions to be asked when you go shopping for a home mortgage. Your local CPA can help you understand them and advise you on the best mortgage options in your situation. Call on him or her for advice on any of your financial needs.
To listen to podcasts with more financial tips, go to http://www.calcpa.org/Content/community/financialempowerment.aspx.