Mortgages


When applying for a mortgage, you will need just a few pieces of information:

  • Name and Social Security number of each applicant
  • Current address
  • Phone number where you can be reached
  • Monthly salary and sources of income (include child support or alimony received)
  • Information on length of employment, and employer address and phone number

What is a mortgage, and what are the benefits of different kinds of mortgages?

Simply put, a mortgage is a loan that a homebuyer obtains directly from a lender to purchase real estate. The mortgage is a lien on the property that secures a promissory note (promise to repay the debt) that states the terms of the loan, including the interest rate and the number of payments.

The most popular mortgages available to home buyers today can be divided into two general categories: those that offer fixed interest rates and monthly payments, and those in which one or both of those factors are adjustable.

Fixed-rate/fixed-payment loans are more traditional and remain the most popular home financing method, currently accounting for about two-thirds of all residential mortgages. Their advantages are well-known: you always know what your monthly principal and interest payment will be, so your basic housing cost will remain unaffected by interest-rate changes until the mortgage is paid off.

Mortgages that entail flexible rates and/or payments have grown in popularity in recent years, primarily during periods of high interest rates and/or rapidly rising home prices. Many, including the popular ARMs (Adjustable Rate Mortgages), offer lower-than-market initial interest rates that allow buyers a measure of affordability unavailable in fixed-rate loans. The tradeoff may be higher interest rates and higher monthly payments later on.

The "Mortgages at a Glance" table provides a brief synopsis of some of today's most popular mortgages, their benefits and drawbacks. To find out about any one of them, talk to your ERA real estate professional. He or she can put you in touch with a representative from ERA Mortgage, the preferred lender for ERA nationwide.

What are the different types of lenders, and how do I choose the right one for me?

Before someone lends you the money to purchase your home, they'll want to know a lot about you. And you're entitled to know as much as you can about them too.

It's important because getting a mortgage is not just a one-time signing of documents, a handshake and a check. You will be depending on your lender to fund the loan as promised, on time, and over the life of the loan; to keep good payment records, pay your taxes and insurance (if included in your monthly payment); and to perform many other continuing services. As the preferred lender for ERA Real Estate, ERA Mortgage provides all such services.

Talk to your ERA real estate professional about the lenders you have in mind. Experienced sales professionals are quite familiar with mortgage lenders and can give you sound advice about a lender's reputation, its qualifying procedures, and the unique programs and benefits it offers home buyers.

Are there any mortgages especially designed for first-time buyers?

Today, first-time buyers enjoy a number of mortgage options that make purchasing a home more affordable by minimizing down payments and keeping monthly payments as low as possible during the early years of the loan.

Most ARMs feature an interest rate that is below market for the first year and may only rise gradually after that.

VA- and FHA-insured loans call for extremely low down payments (zero to five percent of the purchase price) and often offer a below-market interest rate. Similarly favorable terms can be arranged with the help of private mortgage insurance or PMI.

Finally, first-timers who can find a cooperative seller or third-party investor can look into such non-traditional financing methods as a lease/buy arrangement. Check the "Mortgages at a Glance" table for the unique benefits and requirements of several major mortgage alternatives.

FINANCING TIP

Anyone can apply for an FHA mortgage provided the loan amount doesn't exceed the maximum allowed by law.

Can I get an FHA or VA mortgage?

Just about anyone can apply for an FHA-insured mortgage through banks and other lending institutions. They are particularly well-suited for buyers of moderate income; the low down payment requirements (as low as five percent of the purchase price) are matched by a relatively low maximum mortgage amount.

Similarly, VA-guaranteed loans often require no down payment for up to four times the amount guaranteed by the VA. These loans are reserved for either active military personnel or veterans, or spouses of veterans who died of service-related injuries.

If there is a downside to these loans, it's the qualifying process. Though you apply for government-insured financing through a lending institution, the Federal Housing Administration or the Department of Veterans Affairs must insure or guarantee the loan and may require specific documentation or procedures not necessarily required for conventional financing. That may take more time than is generally required for conventional mortgage approval. Additionally, FHA-required insurance must be added to your payment.

As the preferred lender for ERA Real Estate, ERA Mortgage has been delegated authority by each of these agencies to ensure a quicker loan process.

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