Mortgage Loan Basics

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The most popular types of mortgages throughout the United States are Fixed Rate (Conventional) and Adjustable Rate Mortgages (ARM). Our finance company offers both, as well as a variety of other home finance options.

Fixed Rate Mortgages

Mortgages generally run for 30 years, but may have 15-year or 20-year terms. A fixed-rate or conventional mortgage will stay at the same rate for the length of the loan. The shorter the term of the loan, the higher the payment will be; this is why most people choose the 30-year option – to get lower payments.

With a fixed rate mortgage, your monthly payment will always stay the same. The longer term means you will pay more interest over the life of the loan, while shorter terms will pay less interest. These are all important considerations when selecting the ideal terms for your situation.

Adjustable Rate Mortgages (ARMs)

This type of mortgage has a mortgage interest rate that adjusts up or down, depending on the current mortgage interest rates. They usually have a cap or limit on high the rate can go during an adjustment period, and for the life of the loan.

ARMs have a lower initial rate, which means you should qualify for a larger loan amount than with the fixed rate mortgage. There is a risk that the monthly payments will be higher in the future if the interest rate goes up substantially.

ARMs are particularly suitable for those who only plan to stay in a home 3-5 years, or who expect an increase in income in the future.

Steps to Home Ownership

Every home buying experience is different, and other factors will be involved such as termite reports and inspections, but generally the basic steps to home ownership are as follows:

1. Prequalifying
Your mortgage consultant can help you get prequalified before you start to shop for a home. Prequalification lets you know how much home you can afford. You may want to go one step further and get preapproval. Experts agree that savvy homebuyers get preapproval before beginning the home search because it gives them clout with sellers. Most sellers today are unwilling to negotiate with a buyer who has not been preapproved because they fear wasting their time with an unqualified buyer. National Home Finance will gladly help you get prequalified and preapproved before you start your search for a home.

2. Check out the Market Place
Utilizing sites such as Zillow.com, Realtor.com, and the local Multiple Listing Service (MLS) service, you can get a good idea of what homes in your area are selling for. Every market is unique, and buying real estate is no different.

3. Choose a Realtor®
While you can shop and negotiate for yourself, it is generally not recommended. A home purchase is the biggest investment most people will ever make. It’s not something to be approached lightly.

4. Select the Home of Your Dreams
Armed with your prequalification, you already know how much home you can afford. Because you will have discussed and calculated this with your National Home Finance mortgage professional, you already know what your likely payments, closing costs, down payment, and other costs will be. We do our best to make sure there are no surprises!

5. Make Your Offer
You do this step with your Realtor®, who will guide you through all the requirements of submitting the offer, and subsequent negotiations.

6. Get Appraisal
When you and the seller have agreed upon the offer to purchase, we order your appraisal. It usually takes 10-14 days before the written report comes back.

7. Closing
By the time you reach closing (usually around 30 days from start of process – maybe less if everything goes very smoothly), all the paperwork should be ready for you to sign. We will contact you several days prior to closing. At that time, we will go over your agreed-upon loan payments, due dates, and other details to make sure there are no surprises. On the day of the closing, you will sign your paperwork with the closing attorney or agent. Among other documents, you will sign a note and mortgage / deed of trust.

8. Move into Your New Home
And hopefully, live happily ever after.

For the sake of brevity, this list has been simplified. See Frequently Asked Questions for additional information on loan closings and more details on the loan process. Be assured that your NHF mortgage consultant will go over every detail with you until you are completely comfortable. We look forward to helping you secure the best mortgage loan for your new home.

Contact a National Home Finance mortgage home loan consultant at 910-332-4040 or [email protected]
Fax us at 800-997-9076
Mail us or stop by our offices at: 5512 Business Drive, Wilmington, North Carolina, 28405

Additional Resources:
Realtor.com: Home Buyer’s Basics
Investopedia.com: Mortgage Basics

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