Buying a home: the whole process can feel a little like jumping off of a cliff, whether you are buying your first home or your third. This is especially true when agents and mortgage brokers start throwing around terms you aren’t familiar with.
At Timberwood Bank, we want to help take the complexity and anxiety out of purchasing a home. With the right knowledge, you might just find you have a real handle on things. To help you out, here are a few key phrases when it comes to the home buying process and how they can impact your purchasing decision:
- Escrow account: Your monthly mortgage loan payment is divided between the principal, interest, taxes and insurance (PITI). The Escrow account is established to give you the comfort of not worrying about how you will come up with the extra money for the big real estate tax bill at the end of the year or for your homeowners insurance premium when it is due.
- PMI: This stands for private mortgage insurance. Not everyone has to pay this– usually, the bank will only have you take out this insurance if you have less than 20 percent to put down on the house. The insurance is for in case you default on your loan.
- Closing costs: Your real estate agent may have told you to have these included in the negotiations, but what exactly are they? Often, closing costs include the next year’s taxes, insurance, attorney’s fees, appraisal fees, mortgage application fees, etc. They typically run in the thousands, so it’s prudent to either have the money set aside to pay them, or to negotiate this as something the seller pays for.
Buying a home is a big deal. Be sure to ask a lot of questions, ensure you understand everything that is being agreed to and be thorough when it comes to reviewing documents.
At Timberwood Bank, we can be here for you every step of the way in the home buying process. Call our mortgage lenders today to set up an appointment today.
Timberwood Bank, Member FDIC and Equal Housing Lender