Ready to Pursue Your Dreams? It’s Time for a Mortgage.
Buying your first home is exciting — but financing it can be confusing. There are so many options, between all of the various loan types and terms, which all need to be matched up to your financial goals. But there’s good news in this process. Study after study shows that homeowners are 30-40 times as wealthy as renters. So, financing your dream home sensibly is an excellent financial decision.
That’s why we’ve put together this quick guide and a few useful calculators to help you understand your options.
Use these handy calculators to estimate your payments, figure out what you can afford, or choose between renting or buying. But remember, our simple calculators can never replace the seasoned and personal advice your REALTOR® and a mortgage professional can offer you.
Our calculators are based on standard formulas and the data you provide and may not apply to your specific situation. Always check with a professional before making a significant financial decision.
Talk to your REALTOR®
First and foremost, one of the best resources available to you to discuss your mortgage options is your REALTOR®, who can likely recommend a mortgage professional to help you put the right financing in place.
An important but little-known fact is that it really matters where you get your mortgage when you’re making an offer on a home. Sellers will often look for buyers with solid financing from lenders they know and trust, because it can make the whole transaction run more smoothly.
That’s why your local mortgage lender or broker, working hand in hand with your REALTOR®, can make the difference between an offer that is accepted and one that comes in second place.
It’s also important to consider your goals. Do you plan to stay in your new home for years? Will you ever rent it behind you? Is this your first home, or your fourth? All of these factors are important considerations when it comes to choosing the right loan for your circumstances.
Types of Loans
You can classify home loans in any number of ways, but here are the most common types of mortgages:
Fixed rate or adjustable rate: A fixed rate loan is a mortgage with an interest rate that is set when you take out the loan, and it will never change. An adjustable rate mortgage has an interest rate that may go up or down.
Conforming or Jumbo Loan: A conforming loan means that the mortgage is made under the auspices of Fannie Mae and Freddie Mac, government entities that guarantee loans for banks. In New York City and some other parts of our service area, conforming loans only go up to $726,525. You’ll need a jumbo loan, which is not backed by the government, if you need a loan over this amount.
First or second mortgage: A first mortgage will always be the primary lien on your home, and it takes precedence over every other type of loan you might take out on your home. Usually, the loan used to purchase your home is secured by the first mortgage. Second mortgages also use your home as collateral, and it is paid out in one lump sum at the beginning of the loan. Many people use a combination of loans to achieve their financing goals.