Choosing The Right Mortgage

Choosing The Right Mortgage For First Time Home Buyers

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Choosing The Right Mortgage For First Time Home Buyers

What’s the Right Mortgage for my Purchase

Buying a home is a huge decision. It is an exciting time in one’s life and can be a huge challenge.

  • What area do we choose to live in?
  • How much can I afford, or do I want to afford it?
  • Is the house big enough for now and in the future?

These are some of the concerns when purchasing a home. If home buyers only look at rates they may be overlooking some very expensive fees. There are some very specific items that need to be considered when looking for a mortgage and shopping and negotiating the best mortgage.

Choosing The Right Mortgage For Particular Situation

First off start a mortgage application and get a pre-approval letter before starting looking for a home. Homebuyers need to understand how much of a house they qualify for. But more importantly how much do I really want to spend on a monthly payment. The industry standard is 28-31% for a mortgage payment. It is important to consider other monthly expenses and how large a monthly payment does a new homeowner wants to have.

Monthly Housing Expenses For Homeowners

Besides P.I.T.I. (principal, interest, taxes, insurance), it is including other monthly expenses such as the following:

  • insurance
  • cable
  • utilities
  • maintenance on the property etc.
  • These items need to be factored into new homeowners overall budget
  • Homebuyers working with a lender, the loan officer should be able to help new home buyers with many of these items.

Choosing The Right Mortgage And Understanding Financial Situation

The goal is to understand the borrower’s own financial situation. Borrowers should have a clear understanding of how much house they can afford and are willing to afford and not end up house rich and cash poor.

The next step is asking yourself these questions:

  • How long do I plan on living in this house?
  • Where do I see myself in five to ten years?
  • Do I want to do home improvements?
  • Do I want to keep cash on hand in case of an emergency?

Once home buyers realize they can afford a property and have analyzed their financial situation and credit history. Now it’s time to put the ball into action.

Choosing the right Mortgage:

  • How much can I afford to put down?
  • Should I choose a 30 year or 15 years?
  • Is an ARM the right product for me?

How Much Down Payment Is Required

How much can I afford for the down payment?

How much can I afford for the down payment?

  • Can I put down 20% to avoid the (PMI) Private Mortgage Insurance payments
  • So on a $350,000 house 20% down payment is $70,000

If homebuyers can put down 10% or $35,000 then they will be forced to pay PMI.

  • So, you need to explore all your options ahead of time
  • There are all sorts of products that allow as little as 3% to 3.5% down depending on the borrowers’ situation

Borrowers must determine what is most important to them:

  • interest rate
  • or payment

Different loan programs offer different interest rates along with the amount buyers put down. The more information buyers give their loan officer the better they should be able to advise borrowers on the right program.

Asking Lots Of Questions Is Key

This is probably one of the biggest purchases in your life so don’t be afraid to ask all the questions and ask again until you are comfortable with the answer. Also, don’t feel you’re bothering your real estate agent or broker- they are getting paid to advise you.

With over 33 years of experience in the financial services industry; the last 18 years in mortgage lending, I offer my customers a level of expertise few can match. Regardless of the difficulty of a transaction, my priority is to work with individuals and their real estate professionals to help ensure a positive experience.

With the interest rate volatility, this economy has been enduring for the last few years, now more than ever, special skills are needed to find the mortgage product that fits specific needs. Many people have tried “do-it-yourself” mortgage shopping on the Internet, but with lending guidelines changing daily, most people recognize the importance of having a professional act on their behalf.

I am fully committed to assisting each of my clients to make the right financial decisions that will benefit them and their families for many years to come. I provide exceptional customer service that is easily recognized. I offer extremely competitive rates and loan programs including; Jumbo, FHA, VA, Conventional (both Fannie Mae and Freddie Mac), Fixed Rate, Adjustable Rate Mortgages and Reverse Mortgages. Also Closing cost credits.

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