August 10th, 2015 2:30 PM by Leonard Silvestri
Purchasing South Florida real estate can be an overwhelming process especially without guidance from a professional Boca Raton mortgage broker. If you're a first time home buyer, it can be even more intimidating. The professionals at Alternate Mortgage Group can help guide you through the process. Here are some key things to consider:
Mortagage rates generally come in two forms:
A fixed rate mortgage is pretty self-explanatory - the interest rate is fixed. That means for that the interest rate will remain fixed for the entire duration of the loan term. Other factors may fluctuate, such as insurance and taxes, but the interest rate will always remain the same. Fixed rate mortgages typically have a slightly higher interest rate, but the borrower has the security of fixed principle and fixed interest payments.
An adjustable rate mortgage payments and interest rates fluctuate over the life of the loan. Typically, these loans begin with a fixed period anywhere from one to ten years. Then the rate adjusts based on a number of factors, such as the prime lending rate. Many home buyers like the take advantage of low introductory rates allowing them to budget for a larger home.
Choosing how much to put for down for a down payment is a big factor in determining the cost of your new loan. The more equity you owe versus the home's value can help you get a better interest rate. Typically, a down payment of 20% of the home's value will help put you in a good position with lenders. An equity position of less than 20% usually requires that you pay mortgage insurance which will add to the overall cost your mortgage payback. It's best to pay as much of a down payment as you can while still leaving enough for savings and emergencies will afford you the best interest rate and terms.
Points are upfront fees to lower the interest rate by a fixed percentage, usually in increments of 1%. Points are a good idea of you plan on owning your home for a long time.
Special conditions may exist that will affect the overall cost of your home and your monthly mortgage. The bank's main goal is to protect its investment and they will look for factors such as flood zoning, the type of property (single-family home, condo, etc) and such. There's a loan for every type of property but interest rates are typically lower for single-family homes while high-risk propertis will come with a higher interest rate.