You can do a lot in three minutes: run a quarter-mile (maybe more!); brew three cups of Keurig coffee (and be well on your way to a caffeine high); and pump yourself up by listening to Queen’s “We Are the Champions” (with one second to spare). Another thing you can add to the list? Get educated on the mortgage process.
From down payments to deciding between a 15- and a 30-year mortgage, Trulia’s series of three, one-minute videos will provide you a sound introduction to the home-buying process and what it takes to secure a loan on that dream home for sale in Seattle, WA. Grab some popcorn (or maybe one of those coffees), sit back, and enjoy.
Break down the down payment
A down payment is a simple idea — it’s just the money you’re putting down for a house — yet coming up with said dough can be overwhelming. We’re demystifying the down payment in the above video, starting with how much you have to put down on a house. In September 2016, the median cost of a new home was $313,500, so 20% would be $62,700. Translation: A lot of cash. If you don’t have a ton in savings, there are many low down payment options out there. Look into them, and your dream of homeownership may be closer than you think.
Overcome your mortgage intimidation
Just as “hors d’oeuvres” is a fancy word for appetizers, and “shindig” is synonymous with party, “mortgage” is another way of saying “home loan.” There are many different types of mortgages, and as with any investment, it pays to shop around. More than half of borrowers don’t comparison shop before selecting a lender to finance their house, and that can cost you in the form of a higher interest payment.
Meanwhile, if you put more cash toward your monthly payment, you’ll actually end up paying less over time. There are a couple of options to pay off your mortgage early — just make sure your extra funds are going to the principal on the loan, not interest.
Decide on your timeline: 15-vs. 30-year mortgages
A big thing you’ll need to consider when buying a house is whether you want a 15- or 30-year mortgage. The main difference is straightforward: 15-year loans have higher monthly payments, but you pay less interest, while 30-year loans have lower monthly payments, but you pay more for the house in the long run in the form of interest.
Thirty-year mortgages have always been the popular choice: According to the Mortgage Bankers Association, 86% of people applying to purchase mortgages in February 2015 opted for 30-year loans, and that number is not atypical. But if you can afford it, 15-year mortgages can be a smart financial move — you’ll build equity in the house faster, pay less in interest over time, and reduce pressure on your monthly budget in your later years (read: early retirement!).
