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Mortgage Fearbuster 2

Posted by  on Feb 08, 2010
 

Q: My husband and I are arguing about whether or not to buy a house. He says this is the time, because of all time low rates. I think we need to save more, as we have only enough saved for about 5% down. Don't banks and mortgage lenders expect a larger down payment?

A: In many cases, a down payment of at least ten, and usually twenty percent is required to qualify for a mortgage. However, there is an alternative. You may want to consider FHA loans, which are insured by an agency of the federal government. These loans require mortgage insurance, but they also allow as little as a 3.5% down payment. Get a couple of FHA mortgage quotes and use mortgage calculators tools to estimate considerations including affordability, closing costs, and monthly payments.

Q: I've followed your advice, and am shopping for mortgages before looking at homes. As a first-time buyer, I'm swimming in alphabet soup! Mortgage lenders send mortgage quotes using all kinds of acronyms. APR, RESPA, ARM...you get the idea. Help! I'm drowning!

A: I understand your frustration with acronyms, but can you imagine how many more pages of mortgage loan documents you'd sign if everything was completely spelled out? Here's a link to a glossary explaining common terms used by mortgage lenders. When dealing with mortgage lenders, it's always important to have all of your questions answered to your satisfaction; if you don't understand terminology or any other aspect of a potential mortgage loan transaction, ask for clarification.

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