Southwest Missouri Realty’s Guide to Loans
At Southwest Missouri Realty, we want our customers to have all of the facts before investing in a new home. For first time homeowners, especially, there is a lot of information to soak up about home loans and how to go about obtaining one.
A home loan, also known as a mortgage, is a loan which is paid back over a long period of time, in order to secure a house or other property. This allows individuals to cover the costs of a new lodging without needing to obtain all of the money upfront. Banks allow individuals to apply for home loans on the premise that should the debt go unpaid, the house itself will act as collateral.
Fixed Rate vs. Adjustable Rate Mortgages
Most home loans for properties through Southwest Missouri Realty are fixed rate, but some home buyers will apply for adjustable rate mortgages. The difference between the two is that a fixed rate mortgage will never fluctuate in interest rates; the same rate will run for the full length of the repayment period. Adjustable rate mortgages, on the other hand, ebb and flow with the market, following a stabilized period. This can have a positive or negative effect on a homeowner, depending on where the market sits throughout the repayment period.
Southwest Missouri Realty Explains Interest
The interest paid on a house is calculated based on the principle amount of the house being purchased. Banks charge this fee to make up for the time which borrowed funds take to be returned. If the money paid to individuals for mortgages was to be invested, rather than lent, it would generate income; interest is paid to offset this loss.
Many mortgage brokers and realty sites will provide access to an interest calculator, which provides an estimate, based on the cost of the home you are considering purchasing. You can also ask about different interest options during a consult with your realtor in Springfield, MO.
Applying for A Home Loan
So, you have decided to buy a home; congratulations! Now it’s time to speak to a broker and secure a mortgage. The amount of money you are approved to borrow will play a large role in the type of home you are able to purchase. For this reason, it is important to have financial assets in order before applying. Understanding your family’s personal budget can be a big help, and will keep you from being surprised by the number offered by a bank or broker.
Here at Southwest Missouri Realty, we often suggest that our customers do a little shopping around before settling. While mortgage rates may be similar across the board, some banks will provide a better deal than others in terms of rates and amount.
In order to apply for your mortgage, you may be asked to produce proof of income, previous years of income tax statements, and proof of a down payment. Your broker will then take you through the application steps in order to get you the best possible loan for the home of your dreams.
For more information on Southwest Missouri Realty, or home loans, please contact us today.