Mortgage Loans in Sacramento, CA, FAQs
Here are some common questions about home loans, mortgages and real estate.
What is FHA?
The Federal Housing Administration, generally known as “FHA”, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. FHA insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world, insuring over 34 million properties since its inception in 1934.
Why should I buy instead of rent?
When you rent, that money goes to your landlord and that’s the end of the story for you. But when you own your home, you can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes (if you live in a state where you pay state taxes). You can also deduct the property taxes you pay as a homeowner. In addition, the value of your home will go up over time and as the homeowner you can benefit from the equity gain in your home in a number of different ways.
And of course one of the most important reasons of all is that it is YOUR home!
What if I don’t have perfect credit or a lot of money to use for a down payment?
There are a number of loan programs available for first time home buyers with below average credit and limited savings for a down payment. In fact, there are even county specific loan programs available that may help you finance repairs that are needed in the home and assist with down payment and closing costs.
Are there special home ownership grants or programs for single parents?
There is help available. Start by becoming familiar with the home buying process and pick a good real estate agent/broker. Meet with your Anew Lending loan officer right away to get pre-qualified for your loan so that when you find a house you like in your price range you can make an offer right away.
Should I use a real estate agent/broker? How do I find one?
How much money will I have to come up with to buy a home?
- Earnest money – the deposit you make on the home when you submit your offer, to prove to the seller that you are serious about wanting to buy the house.
- Down payment – a percentage of the cost of the home that you must pay when you go to settlement.
There are a number of loan programs available that may be able to help minimize the required down payment for you to obtain a loan for your new home.
- Closing costs – the costs associated with processing the paperwork to buy a house.
When you make an offer on a home, your real estate broker will put your earnest money into an escrow account. If the offer is accepted, your earnest money will be applied to the down payment or closing costs. If your offer is not accepted, your money will be returned to you. The amount of your earnest money usually varies. Ask your realtor for more information.
However, many of the bank owned homes that are currently available can have the contracts negotiated to cover a portion (and on occasion all) of the closing costs required to buy your new home. This of course excludes any down payment required by your lender and the initial earnest money deposit.
How do I know if I can get a loan?
Is the monthly mortgage payment all that I have to worry about as far as my expenses are concerned when I buy my new home?
So what will my mortgage cover?
- Principal: the repayment of the amount you actually borrowed.
- Interest: payment to the lender for the money you’ve borrowed.
- Homeowners Insurance: a monthly amount to insure the property against loss from fire, smoke, theft, and other hazards.
- Property Taxes: the city/county taxes assessed on your property.
The most common repayment period for home loans is 30 years, although 15 year loans are available, too. During the life of the loan, you’ll pay far more in interest than you will in principal – sometimes two or three times more! Because of the way loans are structured, in the first years you’ll be paying mostly interest in your monthly payments. In the final years, you’ll be paying mostly principal.