Mortgage Loans, Down Payments and Closing Costs

The good news is that if you are prepared, it's not hard.  Plus, there are loans available for almost everyone (except those with extremely bad credit).

The variety of mortgage loans available currently is amazing!  There are hundreds of options to select from!  But a good loan officer will know the best option for you.  That is why it's often a good idea to talk to several loan officers.  You need to find the loan officer who understands your personal situation.

Because of the wide variety of conventional loans, the number of "government" loans (FHA and VA) have gone down dramatically.  Yes, if you have good credit you can get a loan for 100% of your purchase price.  Often the seller will be allowed to pay your closing costs for you.  

Explanation of Possible Closing costs that we haven't already talked about:

Loan Origination Fee/Points  Each point or loan origination fee is 1% of the loan amount.  These are basically fees paid in advance to lower the interest rate.  In a period of low interest rates, these fees are rarely charged.  In a period of high interest rates, these fees are quite common to keep the rate down.  

Appraisal Fee  This is the fee paid to the independent appraiser sent to the home by the lender.  The appraiser tells the lender the fair market value of the home.

Tax Service Fee  Some lenders require this fee which is used to monitor the local property tax situation so that the lender will know if they need to raise or lower the amount you pay into an Impound or Escrow Account with them.  These accounts are always required if there is less than 20% down payment on the property.

Underwriting Fee  This is a fee that some lenders charge to have an underwriter look at your loan package and give them final approver.  Other lenders include this in other fees.

Document Preparation Fee  This is a fee that is some times charged by lenders to cover the cost of preparing your documents.  Other lenders include this in other fees.

Flood Certificate  This is to insure that your home isn't located in an area which requires flood insurance.

VA Funding Fee  A fee required by VA on VA loans.  This is the reason it is often cheaper for a veteran to obtain a Conventional 100% loan rather than a VA 100% loan.

Prepaid Interest  Interest on a mortgage loan is paid after the money is used.  That means that each monthly payment includes the interest for the previous month.  At closing you will have to pay interest until the start of the next payment period.  For example, you close the sale on the March 20.  The first payment is not scheduled to be paid until April 30.  You would have to pay the interest from March 20 until March 31 at closing.  Each lender has different payment dates and policies on prepaid interest.

Mortgage Insurance Premium  If you put less than 20% down on a loan, you will have to pay for Mortgage Insurance until your loan reaches 80% of the home value.

Taxes  You will receive a credit from the seller for the time they owned the home this year.  You will pay taxes when they are due.

Settlement or Closing Fee  The closing company always charges a fee for their closing

Title Examination  The attorney who checks the Abstract or Title File for your home will charge a fee for the service.  Some closing companies have attorneys who work for them as employees.  If this is the case, the fee will be included in other fees.

Final Title Search After Closing  Depending on what your contract says...or area custom dictates....buyers will pay for a final title search to make sure every thing is correct before the new deed is recorded.

Recording Fees  This is the fee to record the deed and mortgage (or deed of trust).

Mortgage Certification Fee  Some areas have an additional fee for all mortgages recorded.

Survey  A Mortgage Inspection Report (commonly called a Spot Survey) is usually done to determine where the property lines are located.  If you have a particular concern over the property lines, you may wish to have a survey where the surveyor puts stakes on the corners of the property.

Home Warranty Policy  (also called a Service Contract)  If the seller does not pay for this, the buyer can agree to pay for it.

Linda Grissette of The Best Seller GMAC Real Estate welcomes you to her Just for First Time Home Buyers web site.  Linda serves home buyers in St Charles MO, St Peters MO, O'Fallon MO, Lake St Louis MO, Wentzville MO or Harvester MO (and other areas of St Charles County Missouri).  If you are wanting to buy a St Charles MO home for sale, a St Peters MO home for sale, an O'Fallon MO home for sale, a Lake St Louis MO home for sale, a Wentzville MO home for sale or a Harvester MO home for sale, you've come to the right web site.  St. Charles MO first time home buyers, St. Peters MO first time home buyers, O'Fallon MO first time home buyers, Lake St. Louis first time home buyers, Wentzville MO first time home buyers, Harvester MO first time home buyers, and St. Charles County first time home buyers will all find the help they need on this web site.

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