These Are Important Financial Basics for Every Buyer
Home Buying Financial Basics To Get You Started
In the home buying process, there are a lot of terms and items that you need to understand. Many of those fall under the financial category. It is a good idea to understand these home buying financial basics before you start your search for a new home.
Discount points are something that not a lot of home buyers consider early on in the process. Simply stated, points are basically payments that you can make on your mortgage amount, early on, in order to lower your interest rate. Compared to your loan amount, each point would make up 1%. Another benefit to points is that many are tax deductible.
Interest rates will vary greatly between different lenders
and depending on amount of the loan. An interest rate is the amount that you are being charged, by the lender, for borrowing the loan. Your credit score, the amount of the down payment you put down, and the current condition of the market, all play a part in what your interest rate will be.
Origination ChargeOrigination charge
is the little known charge that not a lot of home buyers understand. This is the amount that each lender or broker will receive from the loan or "origin" loan. It does not include discount points. The main costs that are included in this type of charge are fees for preparing documents, underwriting, and other fees that are associated directly with the original loan.
You can look at the home-buying journey as an experience in which you will learn many new things. Some of this information will be forgotten, but some of the terms and processes will be remembered for years. The next time you buy a home, you will know much more and be more experienced in the home-buying process.