The decision to buy a home is one of the most significant financial commitments you can make. But along with the joys of house hunting, you will also be faced with the potentially stressful task of obtaining a mortgage to finance your home. Your purchasing ability will be affected by many factors, including the amount of money you have for a down payment and the closing costs for the home you wish to buy.
The Seattle real estate market can be very competitive. Getting pre-qualified for your mortgage will help you discover how much home you can afford and it will also show a seller that you're a serious buyer.
Lenders will evaluate your home-buying capability by looking at your credit history, your collateral, and your cash-flow situation. Getting financing to buy a home will be easier if you have essential paperwork in order. Gather together tax returns, recent pay stubs, secured debts such as car payment commitments, unsecured debts such as credit card statements, and sources of additional income.
Your Seattle real estate mortgage options can be thoroughly explained by your lender. However, the two most common types of loans offered are conventional fixed rate mortgages or adjustable rate mortgages (ARM loans).
A conventional fixed rate mortgage means that your interest rate will be the same for the entire life of the loan. Financing for this type of loan is typically spread out over 10, 15, 20, or 30 years, depending on the needs and payment capability of the buyer. A fixed rate mortgage provides buyers with the security of knowing exactly what their monthly house payment will be during the entire loan term.
ARM loans have an initial fixed interest rate that is most often lower than a conventional mortgage. This initial rate is usually locked in for one, three, five, or seven years. Once the initial term is over, the interest rate may go up within specified limits and over predetermined intervals during the course of the loan.
Like a conventional fixed rate mortgage, ARM loans are traditionally repaid over a 10 to 30 year period. The lower initial interest rates associated with ARM loans translate to lower initial monthly payments. The tradeoff, however, is the potential for a higher payment if interest rates go up as the loan progresses.
Other Seattle real estate mortgage options are available for those who need creative financing. Mortgage programs exist for those with less-than-perfect credit, for people who need financing with zero money down, and for low income home buyers. A jumbo mortgage can provide financing for higher priced properties. And blanket – or bridge – loans assist borrowers who have found a new home to buy but still need to sell an existing property.
Securing the financing to purchase your dream house is worth the time and effort that will undoubtedly be required. By planning ahead, and securing sound advice regarding your Seattle real estate mortgage options, your home buying experience should be a positive one.
