For young Americans looking to buy their first home, the process can be pretty daunting. Aside from the baseline financial requirements, there is a lot that goes into finding the right real estate agent, deciding what type of house and neighborhood you want, and of course, applying for a mortgage. With a mortgage specifically, the process goes hand in hand with closing on the purchase of the home, so it’s important you’re attune to every pertinent detail along the way. Moreso, there are steps to take way ahead of applying for a mortgage, to ensure you’re in the best financial position to manage every cost that comes with buying a home.
When buying a home, the type of mortgage you choose will be imperative, as far as how you plan to pay back the loan, the type of financing you need, and what your ultimate plans are for the property in question. Do you need outside assistance? Are you planning to live in the home for a long time? Will you eventually need to refinance? All these questions should be considered at the onset of your mortgage journey.
When taking out a mortgage, or refinancing an existing loan, one of the goals should be trying to obtain the lowest interest rate possible. Of course, accomplishing that will depend on multiple factors, including the amount of the mortgage, the down payment, and the applicant’s financial details.
Despite being a common financial tool, mortgages can be complicated. Whether you’re looking to purchase your first home, or you’re looking to refinance the mortgage you currently have—there are some terms that you may know, and some you may not. Let’s break down some of the most common terminology you need to know to traverse your mortgage search.