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Real Estate Basic Questions

Posted by  on Apr 16, 2009
 
If you are thinking about buying real estate, there are a few questions you might want to ask yourself. For instance, What are the tax implications? Can I expect earnings to increase or decrease? Are interest rates likely to go up or down in the near future? Questions a Borrower Should Ask? Are there any "up front" fees? What is the annual percentage rate? What and how much are the points?

Is there a prepayment penalty? Is there a balloon payment? Is the loan assumable by someone later? How much money must I have at closing? What is the interest rate and term of the loan? What is the monthly payment for principal and interest? What happens if interest rates change during the loan process?

Take the time to carefully examine the programs being offered.

If you cannot qualify for a conventional loan because of income, don't give up.

There are a number of special programs to get you into a home. Some cities have BMR housing programs that allow qualified buyers to purchase new homes substantially below market value.

You should also keep in mind that interest rates are negotiable. You can save money by shopping around for your mortgage. A larger down payment isn't necessarily the best way to go.

It may not be to your advantage to pay off your mortgage early. Larger monthly mortgage payments means a larger tax deduction. Interest rates on mortgages may be high, but the interest is tax deductible.

A short-term mortgage will build more equity for you in a shorter period of time. Mortgage insurance may be required if the down payment is less than 20%. A second mortgage or equity line on top of a low rate first mortgage may be cheaper than refinancing a new first mortgage.

Remember that you should probably pay off credit cards before lender orders a credit report.

Also, make sure that you do not buy a car or take out a loan prior to applying for a loan. In addition, do not charge expensive items on charge cards before getting a credit report. Have verification of the down payment and an explanation of the source of money.

Additionally, you should know that you can actually save thousands of dollars or increase your home purchasing power by selecting the right loan.

New mortgage programs are constantly entering the market place in response to consumer needs.

Take the time to understand and compare programs available to you.

With many tax deductions being eliminated, it is good to know that mortgage interest is still deductible. Besides the interest, you also can deduct any points paid to secure a loan on your first or second home.

Keep in mind that property taxes on your home are fully deductible. These can add up to a sizable savings on your income tax bill.

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