The Real Estate Browser Volume 8, Issue 12 | Page 22

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Volume 8 Number 12 – Say you saw it in The Real Estate Browser of Lynchburg — 21
as auto loans and student loans, and
the terms of the loan you plan to take
out.
You may also consider speaking to
a lender at this stage. If you qualify
for a loan, he or she will provide you
with a pre-approval letter stating how
much home you can afford and the
maximum amount you are qualified
to borrow. Having this letter can help
show the seller that you are a commit-
ted and qualified buyer. Keep in mind
that the amount your lender is willing
to lend is not always how much you
should borrow. You should borrow
only what you feel you can comfort-
ably repay through monthly mortgage
payments. Wait to take this step until
you are actually on the hunt, as pre-
approvals are usually good for only a
limited time.
When determining your budget,
consider the length of your loan and
the type of loan you want. Do you
want to pay back the money that you
borrow over 15 years or 30 years? The
longer your loan term, the smaller
your monthly payments, but you’ll pay
more interest over time.
The type of mortgage loan is impor-
tant, too. With a fixed-rate loan, the
interest rate stays the same through
the life of your loan, as will your
monthly payments. While this can
offer some peace of mind, it’s impor-
tant to know that such loans tend to
have higher interest rates because the
lender isn’t protected against a rise
in its costs over the course of your
loan. On an adjustable-rate mort-
gage (ARM) however, the interest
rate may re-set every one, three or
five years based on the movement
of a specific index and the terms of
the loan. Homebuyers may have low
interest rates when they first take out
their mortgage loans, but the rates
may increase over the loan term. If
your rate changes at a reset, then your
monthly payment will change too.
For a full run-down on all things
homebuying, visit myhome.freddi-
emac.com.
One of the most important aspects
of homebuying is getting a handle on
how much home you can afford. Do
your research before you begin house-
hunting, so you can be well-informed
throughout the process.