If you’re like most people, you’ll need to take out a loan to purchase your next home. If you’re like most people, you’re also already looking at North Florida real estate listings, but don’t get too far ahead of yourself. Before you start visiting properties, it’s a good idea to understand the basics of home financing – that way, you’re prepared when it’s time to get serious.

Financing Basics for Homebuyers

When you borrow money from a lender, you’ll pay back more than you actually borrowed. How much you’ll have to repay, however, is determined by several factors.

Interest Rates

The interest rate is a percentage of the total loan amount that your lender will charge you to borrow the money. Interest rates are generally based on current market conditions, the amount of your down payment, the type of mortgage you choose and your credit score.

Discount Points

Some buyers – those who are qualified – can receive discount points on their mortgages. One point equals 1 percent of your mortgage amount; you might be able to pay one or more points to lower your interest rate, which translates into lower monthly payments. In most cases, points are tax-deductible. However, you’ll have to talk to a tax professional to be sure.

Origination Charges

Origination charges are the charges lenders and brokers receive for originating the loan. This includes fees, underwriting costs, document preparation and other costs associated with taking out a loan.

Loan Terms

The amount of time you have to pay off your mortgage is called the loan term. Short-term loans usually require higher monthly payments, but in many cases, the interest rates are lower. If you pay off a long-term loan early, you might save money on interest charges, as well.

Monthly Mortgage Payments

Your monthly mortgage payment includes:

• Principal, which is the part of your payment that pays back the original amount you borrowed.
• Interest, which is the part of your payment that repays the cost of borrowing the money.
• Insurance, which pays for protection against losses.
• Taxes, which go toward your local government.

Ready to Explore North Florida Homes for Sale?

When you’re ready to start looking at North Florida homes for sale, call us at 386-243-0124 or contact us online. We’ll help you find the right home that fits within your budget.