Wouldn’t it be nice if home buyers could dip into a shoe box full of money and count out the purchase price in cash?
Unfortunately, that dream has taken the route of other fairy tales. Today, 99% of all real estate purchases require mortgage.
When you look for mortgage money, there are several questions to ask beside, “What is the interest rate?” There’s a lot more to financing than interest.
Get a complete estimate of all closing costs involved with your loan. Find out how long the interest rate will remain the same and when the escalator provision will kick in. Is there a limit on the rate of increase? Determine if there is a prepayment penalty. If there is, what are the provisions on the length of time and amount? If you are using creative financing, make sure you know about any balloon payments that may be required in the future. Have your lender explain all provisions in advance to prevent any surprises later.