Let's Break Down Your Mortgage
We need to talk about your mortgage. Chances are, you'll use a hefty mortgage loan to finance the majority of your home purchase. There are a lot of different options out there, and locating the one that's best for you requires a bit of research. First off, we highly recommend meeting with a couple of mortgage lenders to get pre-approved for a loan. That way, you'll know exactly what you qualify for and how much it will cost.
Below, you'll find more information about the specific types of mortgages available to home buyers in Syracuse.
The Different Types of Mortgages
There are four basic types of mortgages used by the majority of home buyers.
Conventional Mortgage
When you think of a "typical" mortgage, this is it—20% down payment, excellent credit required, in-depth financial reviews. Most buyers will use this type.
FHA Mortgage
For buyers that don't have a 20% down payment and excellent credit or financial history, there are other options, like the government-backed FHA mortgage.
VA Mortgage
Most active and veteran military members will qualify for a VA-backed loan, which offers looser financial review and as little as a 0% down payment.
USDA Mortgage
Geared toward buyers in more rural areas, the USDA loan also offers lower down payments and credit / financial history requirements.
What Do Mortgages Include?
There are four main components to a mortgage payment, often abbreviated as "PITI."
Principal
Simply put, this is the price of your home, minus your down payment. It's the initial amount you borrow.
Interest
The total amount of interest paid to your lender is calculated for the duration of your loan and paid monthly.
Taxes
The taxes assessed on your property will be paid to your lender (who then pays your town or city) on a monthly basis.
Insurance
Like property taxes, homeowner's insurance is typically paid to your lender on a monthly basis.
Going Loan Shopping and Understanding Your Options
How do you find a lender? Pick up the phone and start calling! A good place to start is with your bank or other financial institutions you work with. You might also want to ask friends and family for recommendations. Local real estate agents are another great resource for lender recommendations. You'll want to talk to AT LEAST two or three different lenders about your mortgage options before you make any final decisions.
Most lenders, however, will offer you two basic types of interest rates:
Fixed-Rate Mortgage
On this type of loan, the interest rate is set for the duration of the loan. So your payments will not vary for the entire time you pay your mortgage.
Adjustable-Rate Mortgage
These loans have interest rates set by the current market rates—in other words, they'll change as the market does. They often start low but can increase over time.
Calculating Your Monthly Budget
Now that you have a better idea of everything a mortgage entails, it's time to determine how much you can afford to pay each month. The best and most accurate way to figure this out is by getting pre-approved with a lender.
Getting pre-approved basically just means talking to a lender in-depth about your finances. The lender will look over your annual income, any outstanding debts you may have, your assets, your borrowing history, and your credit report. Then, they'll give you an estimate for how much the bank is willing to lend you for your home. We highly recommend meeting with at least two different lenders before deciding on one.
Want a quick mortgage estimate? Try playing around with our mortgage calculator!
Mortgage CalculatorDo I Really Need to Work with an Agent to Buy a Home?
While you're not obligated to work with a real estate agent to buy a home, it is highly recommended. Unless you're an experienced real estate investor or lawyer, you may not understand the many rules, regulations, and best practices for buying a home in Syracuse. Plus, a good local agent will be able to offer invaluable advice into the different neighborhoods and areas of Syracuse, helping you determine which homes and neighborhoods are the smartest investments for you and for the future.
As with picking out a lender, you should do some research before you sign on with an agent. Your agent should be someone you know you can trust, an expert in their market area, and proficient in working with buyers of your experience level.
About Our TeamMaking an Offer
You found a home you love! Now it's time to make an offer. This is where things start to get a little tricky; you'll want to work with your agent to determine an offering price that will be appealing to both you AND the seller. You'll also want to discuss any contingencies that should be in place—like a home inspection and appraisal, particular closing dates, and buyer financing contingencies. This way, if anything falls through (you fail to qualify for a mortgage, the home inspection finds some issues, etc.) you aren't still obligated to buy the home!
What Will I Pay Upfront?
Earnest money
This typically low ($1,000 – $5,000) sum is submitted with your offer to show the seller you're serious. If they turn down your offer, you get your money back.
Down Payment
The amount will depend on your loan (on a typical loan, it's 20% of the price of your home) and will be submitted on closing day when you sign all your paperwork.
Closing Costs
These are typically low for buyers (since the seller pays agent commissions) but include various lender, inspection, appraisal, legal, and documentation fees
Requesting a Home Inspection
If your offer is accepted, it's time to schedule a home inspection. This is an extremely important part of buying a home. You'll want to hire an experienced professional to do a meticulous walk-through of the home to ensure that there aren't any lingering problems or maintenance issues that would affect the sale. You may not be able to catch these during your home tour, which is why it's so crucial to bring in a professional. This is to protect you as the buyer—you don't want to be hit with a serious structural issue right after you move in.
Review Your Contract
Your lawyer will be going over all the paperwork with a fine-tooth comb, but you'll want to make sure where numbers are coming from and what all the fine print means. Don't be afraid to ask questions.
Finalize Your Mortgage
Your lender will likely start hounding you for obscure-sounding paperwork... bear with him. This is all part of the mortgage approval, and while it may seem a bit overbearing, he's just doing his due diligence.
Pay, Close, and Get Keys!
On a predetermined date, you, your agent, your lawyer, and the seller (and their team) will sit down to go over the final details, sign LOTS of paperwork, and pay closing costs. Then (finally!) you get your keys!
Buying Your First Home Doesn't Have to Be Hard
At least, that's what we think. Give us a call today to begin the process of finding your dream home—at your dream price. We're a professional real estate team with years of experience serving the greater Syracuse area. Allow us to leverage our expertise, in-depth area knowledge, and years of experience to help you find the home that's right for you. Give us a call today to get started.