Almaz Habteslassie Habesha Realtor in DMV area
Buying a House For a First Time Tips
Pay Off All Debt and Build an Emergency Fund
Determine How Much House You Can Afford
Save a Down Payment
Save for Closing Costs
Get Preapproved for a Loan
Find a Home for Sale in Your Price Range
Research Neighborhoods for Best Fit
Attend Open Houses and Think Long Term
Make a Competitive Offer (That’s Within Your Budget!)
Prepare for Closing
When buying a home, you and your needs matter most. I will get to know you, your priorities and your must-haves to ensure we find the right home for you.
Find Your Dream Home
Searching for something specific? I can help you spot your dream home with a floor plan that works for you and tends to your needs. I will also ask my fellow agents and contacts for leads on potential homes that are getting ready to come on the market—giving you early insight on all possible homes for sale.
Take Advantage of My Network
As part of Long & Foster | Christie’s International Real Estate, I work alongside a family of mortgage, insurance and settlement companies that can help you land your perfect home. During your home-buying journey, I can connect you with these trusted partners—the mortgage consultants of Prosperity Home Mortgage, LLC, the risk protection experts at Long & Foster Insurance, our home warranty providers, as well as the settlement pros at Long & Foster Settlement Services. I will coordinate all the moving parts and make sure you are ready for the big day. If you are looking for Eritrean Realtor, Ethiopian real estate agents or habesha realtors call at 202-997-2402.
GUIDE HOW TO BUY A HOUSE STEP BY STEP
Determine your budget
Save for a down payment Home
Save closing costs
Get pre-approved for a mortgage Loan
Find a buyer’s agent
Avoid Self-representation
Start looking at homes
Schedule showing with Local your real estate agent
Make an offer
Negotiate if needed
Closing Process
EXPLANATION OF MORTGAGE TERMS & PAYMENTS FOR HOME BUYERS
Definitions Of Common Mortgage Terms
One of the most important, and confusing, decisions that people make is buying a home and taking out a Mortgage to pay for the house. There are many factors that come into play for people looking to buy a house. Factors such as location, size of house and the overall costs can play important roles in the decision-making process.
But finding the house is only the first step in the process. The next step, finding a Mortgage to pay for your home, is probably just as important. The decisions you make on your mortgage will have financial ramifications for years to come. Having a 30 year mortgage at a quarter percent less will result in thousands of dollars of savings.
But the mortgage industry can be very confusing for most people. With the terminology used in discussing mortgages such as appraisals, equity, escrow, points and settlement costs, most common people can become easily confused. Mortgage professionals can speak in a language all of their own and the lingo used is unique. To help take the confusion out of the Mortgage process, we have come up with a listing of some of the more commonly used mortgage terms, and definitions in plain language. We hope this list is helpful to those that are looking to become new homeowners:
3 Mortgage Types:
15-Year Fixed-Rate Mortgage, 30-Year Fixed-Rate Mortgage & 5/1 Adjustable-Rate Mortgage (ARM):
15-Year Fixed-Rate Mortgage
A home loan designed to be paid over a term of 15 years. The interest rate remains the same for the life of the loan. A 15-year mortgage will have a higher monthly payment but a lower interest rate than a 30-year mortgage. Because you pay more toward the principal amount each month, you’ll build equity in your home faster, be out of debt sooner, and save thousands of dollars in interest payments.
30-Year Fixed-Rate Mortgage
A home loan designed to be paid over a term of 30 years. The interest rate remains the same for the life of the loan. A 30-year mortgage will have the lowest monthly payment amount but usually carries the highest interest rate—which means you’ll pay much more over the life of the loan. Unless you like the idea of paying thousands of dollars more for your home than you have to and staying in debt twice as long as you need to, opt for a 15-year mortgage if you’re not paying cash for your home.
5/1 Adjustable-Rate Mortgage (ARM)
A home loan designed to be paid over a term of 30 years. The interest rate does not change for the first five years of the loan. After that time period, however, it adjusts annually based on market trends until the loan is paid off. The interest rates are usually comparable to a 30-year mortgage, but ARMs transfer the risk of rising interest rates to you—the homeowner. Right now, interest rates are incredibly low, and they have been for some time. But once rates start to adjust, there’s a 50% possibility they will go up!
An adjustable rate mortgage, known as an ARM, is a mortgage that has a fixed rate of interest for only a set period of time, typically one, three or five years. During the initial period the interest rate is lower, and after that period it will adjust based on an index. The rate thereafter will adjust at set intervals.
Annual Percentage Rate (APR)Home
Annual Percentage Rate (APR) is the rate of interest that will be paid back to the mortgage lender. The rate can either be a fixed rate or adjustable rate.
Amortization - the amortization of the loan is a schedule on how the loan is intended to be repaid. For example, a typical amortization schedule for a 15 year loan will include the amount borrowed, interest rate paid and term. The result will be a month breakdown of how much interest rate you pay and how much is paid on the amount borrowed.
Appraisal - is conducted by a professional appraiser who will look at a property and give an estimated value based on physical inspection and comparable houses that have been sold in recent times.
Bi-Weekly Mortgage
This type of mortgage has an impact on when a loan is paid and how frequently. In a typical mortgage, you make one monthly payment or twelve payments over the course of a year. With a Bi-Weekly payment you are paying half of your normal payment every two weeks. This is the equivalent of thirteen regular payments, which in turn will reduce the amount of interest you pay and pay off the loan earlier.Home
Closing Costs
These are Money paid by the borrower in connection with the closing of a mortgage loan. This generally involves an origination fee, discount points, appraisal, credit report, title insurance, attorney’s fees, survey, and pre-paid items such as tax and insurance escrow payments.
Closing Statement
A form used at closing that gives an account of the funds received and paid at the closing, including the escrow deposits fro taxes, hazard insurance, and mortgage insurance.
Co-borrower
Additional borrowers whose income contributes to qualifying for a loan and whose name appears on documents with equal legal obligations.
Collateral
Property pledged as security for a debt, such as the real estate pledged as security for a mortgage. Home
Commitment Letter
A formal offer by a lender stating the terms under which it agrees to loan money to a homebuyer.
Conforming Loan
Conventional home mortgages eligible for sale and delivery to either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). These agencies generally purchase first mortgages up to loan amounts mandated by Congressional directive.
Non-Conforming Loan
Non-Conforming Loan is a Loans not eligible for sale to Fannie Mae or Freddie Mac due to various reasons including loan amount, credit outside normal underwriting guidelines.
Conventional Mortgage
A mortgage not obtained under a government insured program (such as FHA or VA).
Deed of Trust
An instrument used in many states in place of a mortgage. Property is transferred to a trustee by the borrower (trustor), in favor of the lender (beneficiary) and reconveyed upon payment in full.
Default
The failure to perform an obligation as agreed in a contract.
Delinquency
A loan payment that is overdue buy within the period allowed before actual default is declared.
Earnest Money(EMD)
A portion of the down payment delivered with a a purchase offer by the purchaser of real estate to the seller or an escrow agency by the purchaser of real estate with a purchase offer as evidence of good faith. Also known as a deposit.
Deposit - A sum of money given to bind a sale of real estate contract. Also known as earnest money deposit (EMD).
Down Payment
Down Payment is the amount of the purchase price that the buyer is paying. Generally, lenders require a specific down payment in order to qualify for the mortgage.
Depreciation
A loss of value in real property brought about by age, physical deterioration, functional or economic obsolescence.
Construction Mortgage
when a person is having a home-built, they will typically have a construction mortgage. With a construction mortgage, the lender will advance money based on the construction schedule of the builder. When the home is finished, the mortgage will convert into a permanent mortgage.
Debt-to-income Ratio
Lenders look at a number of ratios and financial data to determine if the borrowers are able to repay the loan. One such ratio is the debt-to-income ratio. In this calculation, the lender compares the monthly payments, including the new mortgage, and compares it to monthly income. The income figure is divided into the expense figure, and the result is displayed as a percentage. The higher the percentage, the more riskier loan it is for the lender.
Equity
Equity is the difference between the value of the home and the mortgage loan is called equity. Over time, as the value of the home increases and the amount of the loan decreases, the equity of the home generally increases.
The ownership interest; i.e. portion of a property’s value over and above the liens against it.
Escrow
Escrow is A procedure whereby a disinterested third party handles legal documents and funds on behalf of a seller and buyer.
At the closing of the mortgage, the borrowers are generally required to set aside a percentage of the yearly taxes to be held by the lender. On a monthly basis, the lender will also collect additional money to be used to pay the taxes on the home. This escrow account is maintained by the lender who is responsible for sending the tax bills on a regular basis.
Gift Letter
A written explanation signed by the individual giving the gift stating, “this is a bona fide gift and there is no obligation expressed or implied to repay this sum at any time. This is a gift given to a homebuyer from family, friend.....
Fixed Rate Mortgage
Fixed Rate Mortgage is a mortgage where the interest rate and the term of the loan is negotiated and set for the life of the loan. The terms of fixed rate mortgages can range from 10 years to up to 40 years.
Good Faith Estimate
Good Faith Estimate - an estimate by the lender of the closing costs that are from the mortgage. It is not an exact amount, however, it is a way for lenders to inform Home buyers of what is needed from them at the time of closing of the loan.
Homeowner's Insurance
Generally a requirement for any home mortgage. The premium is usually included with the monthly mortgage payment. Costs and coverage vary by state and the value of the home. Get professional advice to make sure you have the proper coverage. Homeowner’s insurance can cover the cost to repair or rebuild due to damage caused by events like fire, windstorms, hail, lightning, theft or vandalism. It can also protect your possessions inside your home like clothes, furniture and electronics.
Prior to the mortgage closing date, the homeowners must secure property insurance on the new home. The policy must list the lender as loss payee in the event of a fire or other event. This must be in place prior to the loan going into effect.
Loan-to-value Ratio
This is another typical financial calculation that is done is called the Loan-to-Value (LTV) ratio. This calculation is done by dividing the amount of the mortgage by the value of the home. Lenders will generally require the LTV ratio to be at least 80% in order to qualify for a mortgage.
Mortgage
Mortgage is the loan and supporting documentation for the purchase of a home. Mortgage lenders generally follow strict underwriting guidelines to limit the possibility of borrowers defaulting on their payments.
Origination Fee
Origination Fee
Origination Fee when applying for a mortgage loan, borrowers are often required to pay an origination fee to the lender. This fee may include an application fee, appraisal fee, fees for all the follow-up work and other costs associated with the loan & it's part of the closing cost fee.Origination Fee is he amount charged for services performed by the company handling the initial application and processing of the loan.
Buying Points
Points are percentage points of the loan amount. Often in order to get a lower interest rate, lenders will allow borrowers to "buy down" the rate by paying points. Paying a percentage point up front in order to get a lower rate will eventually be a saving to borrowers in the long run if they stay in the house for the duration of the loan. If they move shortly after buying the property then they will likely lose money buying points.
Principal
Principal is the term used to describe the amount of money that is borrowed for the mortgage. The principal amount that is owed will go down when borrowers make regular monthly or bi-weekly payments.
Private Mortgage Insurance
When the loan to value (LTV) is higher than 80% lenders will generally not be able to do the transaction. In these cases, the borrowers can get private mortgage insurance (PMI) which is a guarantee to the lender that until the borrower reaches a 80% LTV, they are covered from default. To get this protection, borrowers pay a monthly PMI premium. One popular option to get around paying PMI is to take a second mortgage and use it as a down payment on the first.
Settlement Costs( closing costs)
- prior to closing, the attorneys involved in the mortgage closing will meet to determine the final costs that are associated with the loan. These settlement costs are given to Home buyers & House sellers so that they will be prepared to pay the closing costs that have been agreed upon.
Purchase Contract
Purchase Contract is an agreement between a Home buyer and a house seller of real property setting forth the price and terms of the sale. Also known as a sales contract.
Title Insurance
The lender is using the home as collateral for the mortgage transaction. Because of this, they need to be certain that the title of the property is clear of any liens which could jeopardize the Mortgage. So, lenders will require borrowers to get title insurance on the property, which will ensure that the homes are free and clear.
Mortgage Monthly Payment
Usually, the amount of PITI (principal, interest, taxes and insurance) paid each month on a mortgage note.
Homeowner’s Association Dues
The fees imposed by a condominium or homeowners association for maintenance of common areas.
Lien
Lien is legal claim or attachment against property as security for payment of an obligation.
Foreclosure
A legal procedure in which property mortgaged as security for a loan is sold to pay the defaulting borrower’s debt.
Title
Title is the legal evidence of Home ownership rights to real property (a House).
Survey
Survey is the measurement and description of land by a registered surveyor ( The property map).
Truth in Lending
Truth in Lending is a federal mandate that all lenders must follow. There are several important parts to the Truth In Lending regulations including proper disclosure of rates, how to advertise mortgage loans and many other aspects of the lending process. These regulations were put into place to protect consumers from potential fraud.
Equal Credit Opportunity Act (ECOA)
A Federal law requiring lenders and other creditors to make credit equally available without discrimination based on race, color, religion, national origin, sex, age, marital status, receipt of income from public assistance programs or past exercising of rights under the Consumer Credit Protection Act.
Fair Credit Reporting Act FCRA
A Federal law, which requires a lender who is rejecting information. This law also requires consumer-reporting agencies to exercise fairness, confidentiality and accuracy in preparing and disclosing credit information.
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