Purchasing a home for the first time can be a rather daunting process, especially if you’re unfamiliar with the processes involved. Before you decide to place an offer, it’s important to make sure you’re fully ready for what lies ahead, and that you’re making the best decisions for your particular circumstances.
Here’s a quick overview of some of the most important questions first-time home buyers in Alpine, TX must ask themselves.
Q: How much of a mortgage can you afford?
You’ll need to address this issue right off the bat, because this will frame the price range you’ll have when looking for houses. This will, in most cases, be determined by the banks. When you go through the pre-approval process, the banks will give you a number up to which they’ll approve you for a mortgage loan.
Q: Should I get a fixed- or adjustable-rate mortgage?
Fixed-rate mortgages have an interest rate that is set and locked in from the time you take out the loan, with rates that will not change over time. Adjustable-rate mortgages will change over time, and often start lower than a fixed rate but eventually rise. Your choice will likely depend on the current state of interest rates. If rates are already low, you’d want to lock in those rates for the long term.
Q: What is PMI?
Private mortgage insurance (PMI) is a way to protect lenders if a borrower puts less than 20 percent down on a home. If you default on your loan payments, this insurance policy ensures the lender gets their money.
Q: How much money should I put down?
You should put down as much as you can afford, but a good standard is to make a 20 percent down payment so you can avoid having to pay PMI. If you want to pay off your house faster or want to reduce your monthly payments, you can put down more money.
Q: What length of mortgage should I get?
Most borrowers will take out 30-year mortgages to make the monthly payments more affordable. However, this will also result in you paying more interest over time. Keep in mind that you can still pay off your mortgage early—most of the time there will not be any early payment penalties. Consider your financial needs and what your monthly finances look like when determining the length of your mortgage.
Q: What do I need to know about closing fees?
Closing fees will vary for every mortgage lender, so you should check with your lender about what you can expect with regard to closing costs for your situation. These costs can include appraisal fees, title insurance fees, attorney fees, documentation fees, insurance, prepaid taxes and other such costs. There might be several thousand dollars added to the loan amount to account for closing costs, which you’ll need to pay at closing.
Interested in getting more help with questions to ask before buying your first home in Alpine, TX? Contact Carpenter Real Estate to speak with an experienced realtor.