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Part 4 - Don’t Buy The Brooklyn Bridge.
Things To Know About Attorneys, Appraisers, Mortgages, & Insurance -
More Tips From The Home Inspection Pros
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Adjustable Rate Mortgage
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Adjustable rate mortgages have many variations, since these mortgages are adjustable, the rate may change every adjustment
period and this period can be one, three, five, etc. years. At the adjustment period, the mortgage rate is adjusted in accordance with indexes and caps (how much a rate can change at an adjustment
period and how much the rate can change over the life of the loan). Some ARM’s also permit conversion to a fixed rate mortgage under certain conditions. Adjustable rate mortgages typically
offer lower initial rates but are subject to change, up or down, and are based upon national indexes such Treasury Notes, etc. ARM rates will reflect future changes in interest rates and could be a
rude awakening for a borrower if interest rates rise. Typically, persons who intend to own their home for a shorter period of time may want to consider an ARM.
Visit our Library for glossaries
of financial terms and web resources of references for mortgage information.
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Insurance, Etc.
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The real estate agent, or attorney, will order a title report, you don’t want to buy the Brooklyn Bridge. In other
words, you want to be sure that the seller(s) of the home actually own the home, and you want to know what mortgages and other loans are secured by the home, and whether there are any liens on the
property that will have to be satisfied at the closing by the seller.
Lender’s title insurance covers contingencies regarding who owns the home and possible outstanding liens on the
home; your real estate agent, or attorney, will advise you what is required. Don’t forget, for a one time fee, there’s also title insurance for owners to protect against challenges to the
title.
Your mortgage lender will typically require that you carry home owner’s insurance to be sure that the value of the home is preserved should a disaster occur.
Flood
insurance may be required in certain cases where the home is located in an area prone to flooding. Earthquake insurance may also be required in areas prone to these occurrences.
If your down
payment is a small percentage of the loan (often less than 20%), your lender may require Private Mortgage Insurance. To be sure that there are no lot line disputes, or zoning non-compliance
issues, the mortgage lender may also require a survey on the property, if a current survey does not exist.
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Congratulations
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Congratulations, you’ve done it. Buying a house is a job in itself, there are many assistants you will need to rely upon to help you
through the process. As you have read above, there are costs above and beyond the cost of the home including those mentioned above, bank closing costs, and the pre-payment of certain real estate
taxes, etc.
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You are on the Home Buying Guide page of the Get Advice section of our site, select a link to get more advice.
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