Mortgage Basics 101

Understanding mortgages can be difficult, which is why we’ve put together some information to guide you through the mortgage basics.

You don’t need an advanced degree in economics to understand the financing of your home. A crash course in mortgage basics will suffice, and First Bank has the resources to help you learn the ins and outs of a mortgage.

What is a mortgage? According to Investopedia, at its most basic, a mortgage is a loan used to purchase a house. While this definition may seem simple enough, home loans are complex. There are many different types of home loans and each can have varying terms and interest rates.

Types of mortgages. Mortgages can be broken down into two main categories—fixed-rate and adjustable-rate—and each category can include different loan types. Fixed-rate mortgages are popular because the interest rate stays the same throughout the life of the loan and they typically have less complicated terms. Adjustable-rate mortgages are loans in which the interest rate can change. Adjustable-rate mortgages typically have lower initial interest rates than fixed-rate mortgages, which means your initial monthly payments will be lower.

Getting a mortgage. Before you apply for a mortgage, it helps to understand the types of mortgages available to you, how much house you can afford, and what you will need to apply. And one of the best ways to find out this information is to use mortgage tools from First Bank, from mortgage calculators to application help, we make the process of purchasing a home as simple as possible. Mortgage Basics

Help from First Bank’s Mortgage Center

By visiting our Mortgage Center, you can get the benefits of a crash course in mortgage basics through a host of services, including:

Mortgage Know-How. This is a collection of blogs, articles, tips, and guides for first-time or experienced home buyers, builders, or refinancers.
Calculators. Use these tools to calculate how much house you can afford, determine whether you should refinance or not, decide to buy or rent, or figure out how much you can save by increasing your mortgage payment.
Application Help. We give you the opportunity to fill out a mortgage application online to expedite the process, but if you need help with the application, simply contact one of our home loan experts.
Loan Comparisons. See a comparison of all our different loan options, so you can select the one that is right for you. Choose from conventional, government, jumbo, professional, or construction mortgages.
Find a Loan Officer. Enter your location to see the nearest First Bank home loan officers to you, or fill out a short form to have a First Bank specialist contact you within 48 hours regarding your mortgage.

Once you’re up to speed on all the mortgage basics and ready to go ahead and fill out a mortgage application, simply use our easy online application.

Find a First Bank near you to learn more about a mortgage.

Loans subject to credit approval.

———

Sources:

Investopedia: http://www.investopedia.com/university/mortgage/

Share:

Sign up for our newsletter and be the first to know about new tips, insights, and products from First Bank.

First Bank may use this email address to contact you about products, services, and promotions.

You may be interested in...

Closing On Your Home: Just the Facts You can throw around offers and sign purchase agreements all day long, but you won’t actually own your home until you go through the closing process. 3 min read

Compare First Time Mortgage Rates with First Bank When you’re ready to buy a house, it’s easy to get caught up in all of the excitement of shopping and forget about the financial aspect. Once you’ve found the perfect house, the first thing you may be wondering is where to get 20-year mortgage rates, or even 30-year mortgage rates. But you may not know that you have other options. First Bank can help you determine what type of mortgage works best for you, and help structure a loan that meets your individual needs. About 20-Year Mortgage Rates Before we tell you where to get 20-year mortgage rates, let us explain what a 20-year mortgage is, and tell you about all of your options. Twenty-year mortgages are typically offered as fixed-rate mortgages, meaning your interest rate—and your total monthly payment of principal and interest—will stay the same for the entire term of the loan. A fixed-rate mortgage offers a predictable monthly payment, making it easier for you to follow your budget. With fixed-rate mortgages, you also have the option to take them out in 15 or 30-year terms. These other two options could work better for you depending on your financial situation. While a 20-year mortgage helps you pay off your home faster and build equity quicker than longer-term fixed-rate mortgages, a 15-year mortgage will help you pay it off even faster, and pay less interest. However, 15-year mortgages have higher payments than other longer-term mortgages. 30-year fixed-rate mortgages allow you to pay off your loan with lower monthly payments, but since the life of the loan is long, you’ll pay more interest and build equity slower than you would with a shorter-term loan. First Bank offers conventional fixed-rate mortgages in 15, 20, and 30-year terms, and we also offer adjustable-rate mortgages. To learn more about our loan options, or if you’re still wondering where to get 20-year mortgage rates, visit your local First Bank branch. Our loan experts will be happy to teach you more about mortgage loans and rates, or help you structure a loan that meets your needs. *Loans subject to credit approval. 2 min read

Current 30 Year Mortgage Rates – South Carolina If you’re looking for current mortgage rates in SC, it’s a great time to buy! In a recent survey conducted by GoBankingRates, the state ranked 27th in the nation for the lowest average home mortgage. The study combined 30-year fixed, 15-year fixed, and five-year ARMs (adjustable rate mortgages) to rank each state by the average cost of a mortgage. Current Mortgage Rates in SC First Bank offers conventional home loans, including a 30-year fixed-rate mortgage. This types of mortgages are extremely popular among home buyers because the longer loan term allows for smaller, predictable payments. With First Bank’s 30-year conventional loan, your interest rate and monthly principal will never change, allowing you to budget more easily. If you plan to live in your house for a long time, a 30-year fixed-rate loan could be a good option for you and your family. What Affects Current Mortgage Rates in SC? 30-year mortgage interest rates vary depending on a variety of things, such as: Economic factors. Lending is riskier in some states than others due to unemployment rates, default and foreclosure rates and differing property values. State laws. States that allow recourse typically have lower mortgage rates. Recourse is the recovery of additional money from borrowers who default and the foreclosure sale doesn’t earn enough to pay off the mortgage. Size of competition. More lenders competing for your business means lower costs. Types of preferred loans. States with more military bases will likely see more VA loans, states with more rural housing might have more USDA loans, etc. Market conditions. An increase or decrease in home building and sales regionally or nationally can drive interest rates up or down. Government. Government policies like the Federal Reserve can dictate the fluctuation of interest rates. As you can see, there are a number of reasons why a 30-year mortgage rate in South Carolina can vary. The best way to find out what your interest rate will be is by speaking with a First Bank mortgage specialist. If you are ready to apply for a 30-year mortgage, you can find out your interest rate by starting an online application with First Bank. Loans subject to credit approval. ———- Source: Housing Wire: https://www.housingwire.com/articles/48165-this-is-how-mortgage-rates-vary-by-state/ 2 min read

FHA Mortgage Loan Insurance If you’re in the market for a new home, it’s quite likely that you have thought about acquiring mortgage loan insurance through the Federal Housing Administration (FHA). Established in 1934, the FHA has helped millions of people insure their properties. Over the years, especially following the economic crisis of 2008, the FHA has implemented requirements for potential homebuyers. Loan Limits To remain eligible for FHA loan insurance, consumers must fall within the loan limits. These limits are not only divided by state but are also doled out per county. If you’re curious as to what your state’s FHA loan limits are, you can refer to the Federal Housing Administration’s website. Debt-to-Income Ratio This ratio was set to ensure homebuyers do not purchase a property that they cannot afford. By using these calculations, it can be determined whether or not a person has the potential to meet the demands of owning a home. The ratio is looked at in two different ways: Mortgage payment expense to effective income = Total mortgage payment divided by gross monthly income. The maximum qualifying ratio is 31%. Total fixed payment to effective income = Total mortgage payment added to monthly revolving and installment debt, which is then divided by gross monthly income. The maximum qualifying ratio is 43%. Credit FHA requires that a borrower have good credit standing. In order to receive approval, a lender analyzes the borrower’s past credit performance. Loan approval will likely be declined should the credit history reveal slow payments, poor financial decisions, and delinquent accounts. Other issues are having no credit history, filing for Chapter 7 or Chapter 13 bankruptcy, making late payments, being subjected to foreclosure, and receiving collections, judgements, or federal debts. Apply for an FHA Loan with First Bank You have a friend at First Bank to better understand the loan requirements. We work with the Federal Housing Administration to offer FHA insurance mortgages. In order to quicken the process, you can apply online. Just be prepared with some financial information, such as income, assets, and expenses; you will also have to know the property’s information, like the estimated purchase price and down payment (if buying) or estimated property value and loan amount (if refinancing). ——— Sources: 2 min read

Mortgage Basics 101

Ready to talk to an expert?