Top 5 Terms You Must Know when Buying a Home
Do you want to buy a home this year? The season has already started and sellers have put their homes on the market. You can start searching for your dream house; just make sure that whichever one of these you select, it is affordable for you right now, and in the long run as well.
As for the price, should you pay the one which the seller demands or should you negotiate the deal? A reputed real estate agent told us that negotiation is something which every buyer should try. Sellers do step down from their initial asking price later on, but you have to play your cards right.
The real estate agent also told us the negotiation can be successful only when you are aware of some common terms which sellers and agents like to use frequently. Here are some of these terms:
We are sure you know what a mortgage is. The mortgage is a loan, which you take from a lender to buy a home. This is required if you do not have enough cash to pay for it in full, which is often the case with most of the buyers.
Once the lender reviews your finances, you will be given an approval. Whichever home you consider, try to remain below the approved value. This will ensure that you can meet your monthly payments through the loan term, which we are going to talk about next.
A term is the time period in which the full loan has to be paid off. Generally, this is 15, 20, 25 or 30 years.
We are sure you know what a down payment is. You are given a mortgage only when you give the bank this amount. In most instances, lenders require you to pay around 20% of the home value. For some loans, the amount is relaxed to even 3.5%.
Your credit score is the main factor on which your mortgage rate depends. On an average, your credit score should be around 640. However, some lenders may offer you a loan even if your score is around 620. Needless to say, the higher your score is, the better interest rate you are offered.
When you close the mortgage deal, you have to pay an amount which is termed as the closing costs. This includes loan origination fees, title transfer fees and so on. Closing costs are between 2% and 5% of your home value.
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