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Understanding Down Payments and Closing Costs

When applying for a mortgage, it's essential to know what to expect regarding fees and costs.

Loan Application Fees May Include:

• Cost of a Personal Credit Report: To assess your creditworthiness.
• Cost of an Appraisal: Necessary to determine the value of the property you wish to buy or refinance.

Typical Closing Costs May Include:

• Homeowners and Title Insurance Premiums: Protect your investment.
• Inspection Fees: Ensure your property is in good condition.
• Loan Underwriting Fees: Cover the cost of evaluating your loan application.
• Survey Charges: Confirm property boundaries.
• Closing or Origination Fees: This fee covers the cost of processing your mortgage application and finalizing your loan.

We provide a detailed estimate of these costs within three days of receiving your mortgage application. Additionally, we supply a Truth-in-Lending Statement, disclosing the Annual Percentage Rate (APR) for your loan, so you know exactly what to expect.

Down Payments Explained

Your down payment depends on the type of loan you choose. While down payments can range from 0% to 20%, a larger down payment generally results in lower monthly payments. Many homeowners prefer to set aside at least 10% of the home’s purchase price for a down payment to ease future financial commitments.

What is an Adjustable-Rate Mortgage (ARM)?

An Adjustable-Rate Mortgage (ARM) is a type of loan that offers a lower initial interest rate compared to a fixed-rate mortgage. Here’s what you need to know:

• Initial Fixed Period: ARMs typically start with a fixed interest rate for a specific period (e.g., 5, 7, or 10 years). During this time, your monthly payments remain stable, making budgeting easier.

• Adjustment Period: After the initial fixed period, your interest rate will adjust periodically (usually annually) based on market conditions and a predetermined index. This means your monthly payments may fluctuate after the fixed period ends.

• Potential for Lower Payments: Because the initial rate is often lower than that of a fixed-rate mortgage, ARMs can result in lower monthly payments, making homeownership more accessible.

• Rate Caps: Most ARMs include rate caps, which limit how much your interest rate can increase at each adjustment period and over the life of the loan. This feature provides a level of protection against dramatic rate increases.

• Ideal for Certain Buyers: ARMs can be a great option for buyers who plan to move or refinance before the adjustment period begins or those who expect interest rates to remain stable or decrease in the future.

Is an ARM Right for You?

Consider your financial situation and long-term plans when deciding if an adjustable-rate mortgage fits your needs. Your loan officer can help you evaluate your options and determine the best mortgage solution for your unique circumstances.

Ready to Get Started? Contact Us Today!

Reach out for personalized guidance tailored to your needs. Whether you're unsure about buying a home or have questions about qualifying for financing, we’re here to help.