The purchase of a home is one of the biggest and perhaps most exciting purchases that most people will ever make. Home ownership is a major part of the American dream that nearly everyone wants to achieve. However, the process of getting a mortgage and actually moving forward with a home purchase in Tallahassee, FL is something that many first time home buyers might have some questions about. While they are encouraged to speak with a Certified Mortgage Professional before moving forward with a home purchase, this article should clear up some of the confusion involved.
In order to understand the process of getting a mortgage, prospective home buyers in Tallahassee, FL must first understand what a mortgage is. A mortgage is essentially a loan that home buyers can use to make a home purchase. For putting up the money to make a home purchase, lenders charge an interest rate which is paid simultaneously with monthly mortgage payments. The lower the interest rate that prospective home buyers can secure, the lower their monthly payments will be. Monthly payment amounts can also be lowered by paying a higher down payment, since the down payment reduces the amount that actually needs to be borrowed.
Unfortunately and for one reason or another, some prospective home buyers can’t get approved for a home loan on their own because of lender credit score requirements. To help as many Tallahassee, FL home buyers achieve the dream of home ownership as possible, several government agencies offer to back loans, which is to say that they will guarantee loan pay off to the original lender should the borrower fail to make the necessary payments to pay off a loan.
Some of the federal agencies that back loans include Fannie Mae, Freddie Mac, the Department of Veteran’s Affairs, and the Federal Housing Administration. For many borrowers, securing a loan from a lender would be impossible without the help of one of these government agencies – lenders are much more willing to take a risk on a borrower if they can be sure that the loan will eventually be paid off, either by the borrower or the backing government agency. It should be noted that every government agency which backs home loans have their own requirements which must be met by borrowers in order to qualify for assistance. For example, the Federal Housing Administration typically requires a small down payment and the payment of monthly mortgage insurance to help offset the risk of default. The Department of Veteran’s Affairs typically requires that the prospective borrower have a record of military service.
Before applying for a loan, prospective home buyers in Tallahassee, FL should consider the amount of cash that they will want to borrow, the amount that they want to pay in monthly payments, and the amount of time that they want to be attached to the loan. Mortgages issued for 15 years are generally less expensive overall than 30 year mortgages, but often require substantially higher monthly payments.
Since everyone’s situation will be a little different, a Certified Mortgage Professional can help prospective buyers in Tallahassee, FL find the best mortgage product to suit their needs and can help borrowers apply for the loan once the best products are found.
Chris Brown is the premier expert on HARP loans and Government FHA and VA loans. Please visit The Mortgage Chili Blog