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Mortgages 101

What will my interest rate be? Your interest rate is dependent on market conditions at the time your offer on a property becomes a binding contract. One you are “under contract”, your interest rate will be determined by several factors such as type of property, your credit score, the amount of your down payment and the amount of time until closing.

How much cash do I need for a down payment? Gone are the days requiring 20% as your down payment. In 2020’s mortgage market, you may qualify for a 3% down conventional loan or 3.5% government backed FHA loan. That means 3%-3.5% of the negotiated purchase price. However, the more you put down the better interest rate you are likely to get. Also, if you put down less than 20%, Private Mortgage Insurance (PMI) will be added to your closing costs and/or monthly payments.

What are Closing Costs and who pays them? During the offer negotiation process, Closing Costs may be negotiated between and seller and potential buyer. Closing Costs are costs charged by the lender, attorney, title company and other service providers for preparation of the instruments necessary to convey ownership of the property. Typically you can expect 2-3% of the sale price in closing costs.

Where do I begin? Before you begin looking at homes, it is best to obtain a pre-approval letter from a lender. I can refer you to great ones btw! You will send your information to the mortgage broker who will crunch your numbers (credit score, debt, income, assets, etc.) and issue a pre-approval letter for the maximum purchase price you can buy. This pre-approval letter is good for 120 days and is required by most sellers at the time an offer is presented.


I know the world of mortgages can be complex, ever evolving and a bit frightening, especially during these times. However, rates have NEVER BEEN BETTER than we are seeing today. When I began my career in real estate, conventional mortgage loan rates were 17%…today they are 2.75%. Don’t let this opportunity to own your own home pass you buy! Call me and I’ll put you in touch with a great lender who can guide you through the process!

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