The Boy Scouts are known for their motto, “Be prepared.”. When you’re buying a house, it’s a good idea. Preparation for a first home mortgage can be especially challenging. There are many mistakes that home buyers make during the mortgage process. Before closing your first home mortgage, ask these 10 questions:
- How much will my monthly payment be? Make sure you’re prepared for the monthly payment, especially if you’re paying rent already. Your monthly bill should be affordable.
- What is the due date for my payments? You should learn when your mortgage payment is due, as well as if there is a grace period. Make sure this item is on your calendar each month.
- Am I going to get a different payment? Unless you’re getting an adjustable-rate mortgage, the only change to your payment will be if your insurance or taxes change. Before closing, be sure you understand this.
- Is the seller going to pay some of the fees? There are some cash-to-close fees and closing costs that can be covered by the seller depending on the deal. Consult your mortgage consultant about what can be paid and what is usually paid by the seller.
- Is there a penalty for pre-paying this mortgage? It is important to ensure the mortgage loan you’re entering into will not cost you extra if you plan to pay it off before the end date, even if you don’t think you will be able to do so.
- Is the neighborhood a good fit for my family? Get to know the neighborhood beforehand, maybe talk to a few neighbors. They can explain any general problems in the neighborhood and any specific problems with homeowners. You should also find out what the zoning is for any vacant spaces on the block. There’s no problem if the property is zoned residential. If they are zoned for commercial uses, you may end up living near a fast food place and all the traffic that comes with it.
- Do you have all the paperwork signed? Getting a mortgage loan will require you to sign your name a thousand times. Well, maybe not that many, but you get the idea. Ask about what you signed and why you signed it after all your efforts.
- What is my escrow account balance? Each year, this will fund your homeowners insurance and property taxes. Set yourself up to succeed by bringing enough cash to the closing table.
- How much does the home appraise for? When it comes time to sell the house, keeping this figure in mind can be helpful. It’s worth remembering, even if the figure changes as the years pass.
- Do I have to carry private mortgage insurance (PMI)? Get information on whether you need PMI, the cost and when you can get it removed. In case of default, PMI protects the lender. The fee is generally waived when the mortgage balance is less than 80%.