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Category: Mortgage

A mortgage is a loan secured by real estate as collateral. If you happen to stop making payments, the lender can take possession of the property through a process known as foreclosure. For this reason, it is essential to calculate how much house you can afford ahead of time.  There are many home loans to choose from. Therefore, it is vital to work with a reputable lender to find which loan suits your needs the best. Some of the most popular home loans are FHA, USDA, VA, and conventional.

Government-backed home loans are offered by the Veteran Affairs (VA), United States Department of Agriculture (USDA), and the Federal Housing Administration (FHA). The first two do not require a down payment. On the other hand, FHA loans call for at least a 3.5% down payment in general. FHA’s are also the most popular with first-time homebuyers due to their less stringent credit score requirements. Lastly, if you’re a first-time homebuyer in Virginia, you can also get down payment and closing cost grants if needed. I mention Virginia specifically because this is where I am licensed as a real estate agent.

All in all, there are many options to choose from. In the mortgage archive, you’re going to have access to loads of information regarding such. Lastly, another piece of advice is to follow the 28/36 rule. You should spend no more than 28 percent of your gross monthly income on housing expenses. And no more than 36 percent on total debt, such as credit cards, student loans, and your monthly mortgage note.

Pre-Qualified vs. Pre-Approved

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Pre-Qualified vs. Pre-Approved

Getting pre-qualified and pre-approved are the very first steps of the home buying process. Without this step, you can’t get a mortgage, meaning can’t buy a home. Unless you’re a cash buyer. Nonetheless, most people will have to go through this process before home shopping. If you’re unsure of how much you’re likely to afford, try using a mortgage prequalification calculator first.

Here’s a homebuyer tip from Bank of America: “Expect surprises! Lenders look at every detail of your finances when granting preapproval. You might be asked about a car loan payment you made with a credit card, for example. Be prepared to answer lender questions as soon as they come up.”

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What Is a Mortgage?

Home » Real Estate » Mortgage

What Is a Mortgage?

A mortgage is a loan secured by the collateral of real estate. Mortgages typically have 15 to 30-year terms and can have a fixed or adjustable interest rate. The borrower is bound to make monthly payments to the principal, which is your outstanding balance. In the case that you stop making payments, the lender can take possession of the property. Otherwise known as the process of foreclosure.

All in all, the lender holds the most stake in your home. Therefore, by making monthly payments, you’re always increasing the amount of ownership in the property. Lastly, here’s a fun fact for you: The origin of the word “mortgage” is Latin and then came from Old French, which initially meant a death pledge.

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