Home Loan FAQs
AdvertisementBuying a home can be intimidating. Here are some commonly asked questions about buying a home.
What is a home loan? A home loan is a type of loan given to buy or refinance a home, there are also home equity loans which let you borrow money against the equity already built up in your home.
What is a home equity loan? Through the years of making mortgage, or house payments, you build equity in your home. A home equity loan is a type of loan which lets you borrow against the equity in your home.
What is a home refinance loan? This type of loan is used generally to lower your monthly house payment, or mortgage payment. You are given a loan on your house at a lower interest rate and principal than you would currently be paying.
What are closing costs? When buying a home, there are many costs associated with the loan you will be getting, besides just the cost of the home. There are what are called closing costs. These include such things as Loan origination fees, attorney fees, documentation fees, and appraisal fees. These things must all be considered before deciding to buy a home.
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What is home owners insurance? This is an insurance that you take out against damage or vandalism to your home. There are many things that can be included in any specific home owner’s policy, so it is important to check the details. You will want to be sure the insurance covers damages that are specific to your area, such as floods, earthquakes, or strong storms and tornados. When buying a home, there are often strict requirements on what insurance coverage you need to obtain the loan.
What is mortgage insurance? This term applies to insurance taken out against the possibility that due to illness or injury, mortgage payments might not be made. This usually is necessary when buying a home. The lender wants to be sure that payments will be made in case of unforeseen circumstances.
What is a home inspection? A home inspection is done to check for any major repairs that may need to be done. It includes a check of the foundation, plumbing, electricity, and whatever other guidelines your lender wants done before a loan is given.
What are the points on a mortgage and how do they work? “Points” are lender fees paid at closing. Each point is equal to 1% of the loan amount. The more points you pay at closing, the lower your payments will be on the loan.
What is home appraisal? A home appraisal is an estimate of the value of the home you are buying. It takes into consideration the age of the home, the structure, location and many other factors. These are also done, normally as a lender requirement. These are often done when financing or refinancing a home.
There are so many things to consider when buying a home; your lender should go over each of these terms and conditions specific to your home loan.
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