Buying a home: Highlights

Buying your own home dream of every American. You could even say it is the basis of so-called “American Dream.” People who do not have their own homes, long and hard at saving money, meticulously look for a place to stay and are desperate to acquire their own home.

Dream of own house is always bright and rosy. But in practice, the process of buying a home often makes people strong emotional stress. Buyers are beginning to feel the brunt of the amount of a quarter million dollars (or more), they will have to pay. They are wondering what interest rate loan, they must choose – fixed or floating. They try to find the best lender and verified its solvency. They will have to sign a stack of documents, to communicate with a variety of agents and invest in various unforeseen payments. Buying a home means that a person will have many years to live in debt. Therefore homeowners are struggling to find the money for the full repayment of the loan.

Because of all this, people often feel a strong fear of buying a home. However, a detailed examination of the buying process will help you to easily cope with this problem.
Types of mortgages
Loan for buying a home in the U.S. is called mortgage. This word is often translated as a mortgage. The main two types differ in the way mortgages Interest – a loan with a variable interest rate (Adjustable-Rate Mortgage, ARM) and a loan with a fixed interest rate (Fixed-Rate Mortgage). ARM mortgage rate will vary with the economy. Fixed percentage means that the percentage will remain constant for the duration of the loan. More information about the credit can be found here: the types of mortgage loans.
The initial payment (Down Payment)
The more money you can make when buying a home soon, the smaller the amount of occupied, and the lower the monthly payments on the receivables. Most lenders require that the down payment. The magnitude of this contribution depends on many factors: the type of the selected lender, the loan amount, the age of the home, and even the state of the economy. Usually, the amount of down payment for the purchase of housing is 20% of its total value. Down payments can be reduced if covered by insurance of mortgage debt. In this case, party company guarantees to pay the loan on your insolvency. Insurance of mortgage debt does the Federal Housing Administration (a division of the Department of Housing and Urban Development). For more information on this type of insurance you provide your bank or lender.
Gift items (Discount Points)
Some lenders offer to pay out the so-called “discount points» (discount points), thereby reducing the interest rate. Payment of items can save on the interest a lot of money, especially if you plan to get a long-term loan. One point is usually equal to one percent of the loan amount. That is, if you take a loan for $ 250,000, then the item will be equal to $ 2,500. When choosing to pay 10 points the lender will give you a total $ 225,000, although you will have to pay all 250,000. Thus, the lender earns you $ 25,000 (but real contribution to this amount you do not, this is in contrast to the prior payment). In exchange, it will reduce the interest rate on the loan.

The issue is that you will end up more advantageous to pay points or percentages? This will have all carefully calculated. It will be easy enough to do, if the interest rate on the loan is fixed. In the case of ARM do the calculation is more complex.

Usually advantageous to choose the discount points when the loan period is not less than 6-7 years. But some believe that it is better to make a higher down payment than agree to pay for items. So be sure to compare all the options before making a final decision.

Stay within budget

If the interest on the loan is small, and their payment is not a burden, people sometimes begin to think about buying a bigger house. But it’s important to keep the fees at a level that you can actually afford. Financial advisors say that mortgage payments, insurance and taxes should not exceed 30% with monthly salary. Also, do not forget that the home is often in need of repair, painting, lawn maintenance, the cost of water and electricity, and other costs. You can make an estimate for the maintenance of the house, which will reflect all future costs. After this it will be seen how much money you spent on loan repayments.

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