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You’re thinking about buying a home and starting to build home equity. Good thinking! There are a few things you should consider before rushing into anything. There are costs that are inevitable when you are going buying a home.

Lenders Requirements:
You will first need to calculate how much your mortgage payment will be including PITI (explained below). In general lenders require that your housing payment per month be less than 28-33 percent of your gross monthly income. Besides that, all total monthly debt payments should be less than 36% of your gross monthly income. This includes things such as student loans, credit cards and mortgage costs.

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PITI:
PITI stands for the mortgage principle, insurance, taxes and interest. This is what lenders are looking at. All of these things combined determine your mortgage amount. Of course, these are not the only costs of buying a home.

Down Payment:
This is the money that you put “down” toward buying a home. It translates into a monetary commitment to buying the home. Most down payments are 5-20 percent of the value of the home. If you pay less than 20% down, you may be required to purchase a PMI which is Private mortgage insurance. This is money that protects the lender if you default on the loan. PMI is normally 0.15%-2.5% of the loan amount.

Closing costs and Loan origination and other fees
There are many things involved in closing fees, most of which will be listed below. For the most part, closing costs are considered the tax and insurance that you pay at closing. They normally range from 2-3% of the total amount on the loan.

• Loan Origination fees on a $200,000 home in Georgia; Origination fee would be $2000, Application fee approx. $422, Commitment fee $565, Funding fee, $225, Processing, approx 376, Document prep, $170
• Underwriting
• Tax service
• Home appraisal
• Flood certification
• Pest and other inspection
• Title insurance
• Title work
• Attorneys fees
• Mortgage points
• Title insurance charges
• Other: Be sure to consider that your lender may require you to have certain insurance for the area in which you intend to buy. For example; if you are buying a home in Florida, you may have to have flood insurance as well as other types of storm insurance against things like hurricanes, or earthquakes in California. You also have to have first year hazard insurance.

Note that fees are sometimes paid by the institution covering the loan. This can be very helpful in keeping down closing costs and many lenders now pitch in some of the closing costs as perks to take loans through them.

Be sure to talk to your lender about any costs other than those listed. It varies from state to state and lender to lender on what charges you are responsible for and what costs the lender picks up. Having an idea of the general costs, however, prepares you before you start to look for your home.

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If you want to borrow against the equity in your home, there are two types you should know about before applying for a home equity loan. The first type of loan is a form of a second mortgage. These normally have fixed rates. Before getting your home equity loan, you will want to know how much equity you actually have in the home. This type of fixed rate option is for a certain dollar amount based on your home’s equity. The equity is used as collateral for the mortgage. Equity is made up of funds that a homeowner has invested in the home to raise the value. This first type of home equity loan is best if you need a certain dollar amount for the use you have intended for the money. Applying for this home equity loan is great for such expenses as buying a car, or consolidating bills, and paying off credit cards. Second mortgage type loans are best for calculated amounts of money.

The second type of home equity loan is a home equity line of credit. This is very similar to getting a credit card, only with much cheaper rates than credit cards. With the line of credit type of home equity loan, you don’t actually need to use any of the money, but it is there should you need it. This calculated rate type of home equity loan is perfect for home improvements. Applying for this second type of home equity loan is very easy. You already have the equity built up, and that makes it much more attractive for the lender to approve your home equity application. The line of credit home equity loan is best if you are not sure how much money you will actually need for a project.

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Both types of loans are available once you have built equity in your home. They both have smaller interest rates than credit card or personal loans, generally. You may want to discuss with your lender which type of home equity loan is right for you. They will no doubt be experts at which loans fit for which projects or intentions. Remember, however, that a home equity loan uses the equity as collateral. This is why it is important to know which type of equity loan you will need; a fixed amount of money, or a home equity line of credit.

Getting a home equity loan, in general, is much easier than applying for a first time home loan. Applying for a home equity loan is usually much simpler as well. Discuss options with your lender, but be sure to shop for lenders because some defray some of the costs of the loan, some don’t. You should find a lender who can give you what you need in a home equity loan. Both the second mortgage type loan and the line of credit home equity loan could be a low cost way of obtaining money you need.

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When applying for a home loan, the entire process may seem a bit intimidating. There is much to consider when buying a home, including getting a home loan. There are ways to take the mystery out of it, if you understand the key terms. Your lender should be able to help you with any aspect of applying for a home loan, all the way through the closing costs involved in getting a home loan. One key to saving money on your loan is to shop for the right lender.

People apply for home loans for different reasons. It may be that you are purchasing your first home or you could be thinking about refinancing the home you already are in. If you are looking to borrow money on the money you already have built in equity, the lending institutions make it much easier. Purchasing a home for the first time may involve more investigations by the lenders. If you are looking to refinance your home, what you are applying for is a “Home equity Loan”.

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When getting a loan for the first time for a home, the lenders will want to do full research on the home you want to buy. You will need to apply not only for the amount to cover the cost of the home, but for things such as attorney fees and closing costs as well. When you apply for a loan, your lender should be able to provide you with a list of things you will need. Often, lenders will take on some of the closing costs, which is a plus for the buyers. The only way to know which institutions will help with costs is to shop for lenders. When getting a home loan, having help on some of the costs can be very beneficial.

When buying a home, costs add up. Often the costs add up into several thousand dollars or more with closing costs. The time to find out what your lender will help with is before you apply for the home loan. Costs covered often include things like documentation fees, or maybe application fees. Check out these facts before getting your home loan.

Buying a home can be an exciting time. Be sure you understand everything before signing on the dotted line. Do some checking when applying for a home loan and certainly before agreeing to that home loan! Check lenders fees and expectations on home loans.

Mortgages are not “one size fits all.” Even with lending institutions, there can be several types of loans available to you. Home buying is something lenders deal in every day, so they know what would work for your given situation.

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