Mortgage 101: Essential FAQs You Should Know About Mortgages

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As a first-time property buyer, it can be both exciting and frightening. You don’t just choose a home, place an offer, and get the keys. It’s not as simple as that. There is a lot of processes involved when it comes to buying a house. 

To help you with getting your mortgage approved or applying for Home Loans Grand Prairie, Texas, we have compiled here the most common questions that first-time buyers have.

We’ll also answer them one by one.

Which one should I choose – a variable rate mortgage or a fixed-rate mortgage?

The answer is it depends. It depends on the current mortgage interest rate and the specific financial situation. 

Most fixed-rate mortgages have rates that don’t change over the term of the mortgage, while variable-rate mortgages have rates that fluctuate daily depending on the condition of the market.

Most first-time buyers opt to go with fixed-rate mortgages. They like to know how much they’ll pay every month. This scenario is most often the case for people starting in the real estate industry. 

However, if you plan to sell the property, a variable rate mortgage is something you should consider. Finding the right Home Loans Grand Prairie, Texas can help you choose which among the two will work best for you.

How can I know if the property I want to buy has a lien on it?

Before contracts are sealed, there are a lot of necessary steps that you have to do. Among these is the title search of the property you are planning on buying. Property liens can be very bothersome. It can even put you in an uncomfortable position if you assume these issues when purchasing a home. 

But first, what is a lien? It is a notice attached to a property that shows that the money for that is still owed. It can be for IRS liens when the current owner failed to pay back his or her taxes or a contractor who wasn’t paid in full.

If a property has a lien, it is considered to be negative. The property should have a clear title before the lenders are willing to provide loans for a mortgage.

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What are the fees associated with the housing market?

One of the things that a lot of buyers are going to ask is how much will it cost them to enter the housing market. Well, here are some fees that are related to real estate that you need to be aware of.

Generally, sellers pay most, if not all, of the commission to the real estate agent. When it comes to deposits, you have to make sure it is ready. Also, you have to consider the down payment. These are the money that is on the collection upfront. 

After purchasing a property, some of the costs that you have to shoulder are:

  • Escrow deposit
  • Title insurance
  • Property appraisal fees
  • Loan origination
  • Underwriting fees from lenders
  • Home inspection fees
  • Lawyer fees
  • Title search fees

Aside from that, you also have to consider property insurance, property taxes, and utilities.