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Questions You Might Have When Getting Your First Mortgage

29 September 2020

Mathéo Gerard

If you are getting your first mortgage, you are a first-time homebuyer. First-time homebuyers are new to the loan process, and as a result, they often have questions. If you have questions, do not feel bad; all first-time homebuyers have them. Here are several terms and things you might want to know before applying for your first mortgage to help you understand the process a little more.

Closing Costs

Many first-time homebuyers wonder what closing costs are and how much they cost. Closing costs are fees you must pay when getting a mortgage loan. You cannot get a mortgage without them, but you can compare the fees from several lenders to choose the loan option with the lowest fees. The closing costs cover the work the lender has when offering you a loan, and they pay for many other things, including the inspections you need when buying a house. You can ask a first-time homebuyer specialist about the total cost you might pay when borrowing money to buy a house.

Escrow

The second thing you might wonder about is escrow. Escrow is a familiar word in the mortgage industry, and it refers to an account you use to save money. When you borrow money to buy a house, your lender might set up an escrow account for you. You will use this account to save money for your homeowner's insurance premiums and property taxes.

Underwriting

The next thing you might have questions about is underwriting. Underwriting is a department that your loan application goes to for processing. The underwriting process can intimidate some people, as it is rigorous and meticulous. The underwriters verify all your information and loan details to ensure that you meet the loan requirements.

Loan Terms

The final thing to understand is what loan terms are with mortgages. Loan terms tell you the fine details about your loan. The first loan term to understand is the interest rate. This rate tells you how much interest you must pay for the mortgage. The second term is duration, which tells you the length of the loan. Your loan might have other terms tied to it, and your lender can explain those to you.

These four things are all essential to know when you get a mortgage loan. If you have other questions or want to apply for a loan, contact a lender today or talk to a first-time homebuyer services specialist near you. 

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