The Home Buying Process (Part 2): Mortgages

How to buy a house, part 2, is all about mortgages, the types, the terminology, the timelines and more.

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Show Notes & Useful Links

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Set the table: Our buying a home episode went long. This is the second part about portages. See the previous episode for info on the home buying process. 

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Segment 2: What are mortgages and how can I get one?

• Few have cash to pay for a large item like a home. So they borrow a portion for a home, using the home itself as collateral. The mortgage is the loan banks give for that portion. 

• Over the next 10-30 years, you pay back principle, the amount you owe divided over the months of the term, plus interest that the bank charges. 

• Lots of factors go into interest, mostly the type of mortgage, the term or length of the mortgage, and your credit score.

  • Credit scores include: income, debt ratio, how reliably you pay, how often you open credit accounts, how much you carry each month

  • Mortgages come in term or adjustable rate, conforming, non-conforming, rural, balloon, bridge. 

• Pay your mortgage each month until end of term.

• Mostly interest upfront. Flips to primarily principle later. Can pay additional principle each month. 

• Default on your mortgage and the lender can move to foreclose and sell the property to satisfy the rest of the debt. Bankruptcy protections can kick in here. Also why foreclosures sales can present good deals. 

• Right now, 30 days to approval. Usually more like 15. 

Segment 3: Inspections and other due diligence 

• Full home inspection. Sellers have to make accommodations for buyer and inspector to access home. Roof, foundation, plumbing, electrical, hvac, and if necessary, septic, pool, spa, other structures, sprinkler, wells

• Ask for Sellers Disclosures, notification seller has to fill out regarding any known issues and basic equipment.

• Ask for HOA or POA agreements. These can limit what you may do with the property. 

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