If you’re a first-time buyer in Lake City or a nearby community and you’re taking out a mortgage loan to buy your home, check out the answers to these three common questions.
3 Mortgage Questions First-Time Buyers Have… Answered
Three of the most common mortgage-related questions we hear are:
- Do I really need 20 percent down?
- Why is the bank offering me a higher interest rate than the one I saw advertised?
- Should I get a fixed-rate or adjustable-rate mortgage?
#1. Do I really need 20 percent down?
You don’t need 20 percent down to buy a home. Many loan programs, including VA loans, FHA loans and USDA loans, allow you to put down less than 20 percent to buy a house. Your lender might not even require you to be part of one of those loan programs, either.
The catch, though, is that you usually have to pay for private mortgage insurance if you’re putting down less than 20 percent – that protects your lender’s investment. (You don’t have to buy PMI if you’re using a VA loan, though.)
Related: What’s a standard down payment when you buy a home?
#2. Why is the bank offering me a higher interest rate than the one I saw advertised?
Lenders advertise the lowest possible interest rates to bring in new business. The rates you see advertised are only available to people who qualify, such as those with high credit scores and hefty down payments. Your lender might quote you a higher interest rate based on your own financial profile.
Related: What you need to know about mortgage interest rates
#3. Should I get a fixed-rate or adjustable-rate mortgage?
Fixed-rate mortgages have interest rates that stay the same over the loan’s lifetime. Adjustable-rate mortgages, or ARMs, can fluctuate after a fixed-rate period of time (usually 5, 7 or 10 years).
Related: Fixed-rate vs. adjustable-rate mortgages: What’s right for you?
Are You Buying a Home for Sale in Lake City?
If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.
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