Top 10 List of Things You Should Know About Financing

1. In the state of Virginia closing costs will include your down payment, mortgage points, and about 2.25 to 2.5 percent of the sales price for other charges.



2. If you ask the seller to pay your closing costs you may eliminate any chance of them lowering their price.



3. Your interest rate is determined by your credit score. The better (higher) your credit score the better (lower) your interest rate.



4. You can lower your interest rate by paying the lender more points. This means you pay 1% of the loan amount in cash, up front for every point the lender charges you to lower the rate. However, the lender will not give you a rate lower than the prevailing market or a 0% rate.



5. If you do pay points to the lender, current tax law states you may take the points as a deduction in the same year you closed on the house.*



6. Your mortgage payment will equal the total of a principal payment and an interest payment, plus one-twelfth of the annual property tax bill and the charge for hazard insurance. If you are buying a condominium or a home with a Home Owners Association, your monthly payment will include your condominium or association fee.



7. You will have tax benefits as a homeowner.* Your tax advisor can calculate the tax benefits for you. These items are tax deductible: interest paid, property taxes paid, and mortgage points paid in the year the loan closed.



8. Before looking for a home make sure you are pre-approved by a lender. Most sellers want your offer to be accompanied by a commitment letter from a bank or mortgage lender. In order to be pre-approved you will need the following: credit report, verification of assets (bank statements), and verification of income (pay stubs/or tax returns).



9. Never select a lender based on the interest rate alone. Choose your lender because they have a good reputation of delivering loans on time and as promised. Lenders that advertise low rates often add hidden costs to your loan at closing, or they hope the market will decline prior to settlement and may back out if it doesn't. Ask your real estate agent for a list of good lenders.



10. Calculate your mortgage payment by clicking on the link in the left menu of my web site and going to our Mortgage Calculator.