The financial downturn of 2008 revealed many interesting facts about the real estate and financial markets. A survey conducted by an online real estate database firm highlighted the fact that many buyers don’t know the basics of mortgages. Here is a look at some of the important facts every potential homebuyer should know:
What is APR?
APR means Annual Percentage Rate and is a measure to check the cost of a mortgage. When you talk about a mortgage, you have to include origination and closing costs, as well as any points you pay toward lowering the cost of a loan. Even if the interest rate looks low, the fees to process a loan will bump up the APR.
Changing Mortgage Rates
Mortgage rates are subject to the same forces that rule the financial markets. As such, even if a buyer gets a quote during the day, it could change by the afternoon if he or she doesn’t lock it in.
Lenders and Fees
Mortgages and lending institutions have been under scrutiny by the federal government in an attempt to reduce abuse and put standard processes in place. As there are no regulations in place, different financial institutions can charge different fees for services. Real estate services related to mortgages in Salt Lake City and any other location include appraisals, credit checks, and title related insurance. It is the buyers’ duty to check rates so that they pay reasonable fees and get the best interest rate.
Refinancing Even When Underwater
In 2008, many homeowners found that they owed more than their houses were worth. This fact made it difficult for them to capitalize on low interest rates. The federal government instituted special programs to help these people recalculate their loans. Even if you are not sure you can, it pays to check if refinancing is possible.
Low Down Payment Loans
The ideal down payment amount is 20% of the cost of the new home, but most people even struggle to pay this amount. A few federal programs set up by the FHA, VA, and others help people get a home even with just 3.5% down payment.
Buying or refinancing a home need not be confusing. With relevant information available on the Internet, it is possible to shop around and get competitive rates.