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Do This First!
Credit reporting agencies like Equifax, Transunion, and Experia are legally allowed to sell your name to other lenders and insurers after you apply for a loan and your lender does a hard credit pull. It’s not uncommon for borrowers to receive hundreds of unsolicited calls, texts and emails from providers of credit. You have the right to “opt-out” of these offers, which prevents them from contacting you. Follow the link below to do so. Try to opt out at least a week before you allow a lender to run a hard credit pull.
You Ask, I Answer
How much are closing costs?
Closing costs include all the fees you must pay before you can take ownership of the house. This typically includes origination fees, title insurance fees, prepaid escrows, and more. The amount can vary, but it is usually between 2% and 3% of the home’s selling price. If you’re short on cash, I can structure your loan so that the lender covers most of your closing costs.
What are points and should I pay them?
Points are money paid upfront in exchange for a lower interest rate. One point equals 1% of the loan amount, so on a $300,000 mortgage, one point will cost $3,000.
Paying points can be beneficial in most situations because they are tax-deductible, but you need to crunch the numbers to ensure they are worth it. For instance, you will only want to pay points if the interest savings you’ll get over the life of the loan will be greater than the cost of the points.
What is an escrow account?
When buying a home, the lender will require you to deposit money into an escrow account. This account guarantees the lender that the ongoing expenses of owning the property, like the insurance and taxes, will be paid for. A lump sum is deposited into the escrow account at closing, and a certain amount will be automatically deposited into it every time you make your monthly mortgage payment.
How are payments calculated?
Mortgage payments include the loan’s principal, the interest rate, taxes, and homeowner’s insurance premiums (PITI), assuming you’re setting up an escrow. If you put less than 20% down, your lender will require monthly mortgage insurance. This amount is added to your monthly payment as well.