Atlantic Bay Mortgage Group

Your journey to the joy of homeownership starts here.

What’s the first thing I should do?

The idea of purchasing your first home is bound to bring many questions to mind. This is a natural reaction, as it is one of the biggest decisions you will ever make in your life. Rest assured our team is here to assist you in understanding the loan process with our goal being to make your experience a pleasant one.

Get a mortgage approval letter

Before you go shopping for anything, you need to know how much money you have available to spend. Shopping for a home is no different. Your Mortgage Banker can help you determine how much home you can afford, and put it in writing via a mortgage approval letter. Even if the first thing you do is contact a real estate agent, which many people do, the agent will most times insist you have mortgage approval letter so they know which price range of homes to show you.

Seeking complete approval for financing prior to making an offer on a property is a sound strategy that can help you get the best deal possible, especially if you plan to make a minimal down payment. The seller is often leery of the stability and reliability of the buyer if the buyer is only capable of making a down payment of 10% or less. This can cause you to lose a significant amount of negotiating ability, by being perceived as a weak buyer rather than a strong one. This is why it is very important to get full loan approval in advance and provide a written confirmation of the loan approval when an offer is made. Then you will be perceived as a cash buyer.

Get a real estate agent

The process of finding a home can often be more complex than you may expect. With the help of a real estate agent, you can be assured that you will receive the best service with far less hassle and worry than doing it on your own. If you don’t already have an agent, we work with many of them daily, and can certainly recommend any number of them to you.

Your real estate agent:

• Listens to your wants and needs to find the perfect match between what you can afford and the home that best fits your needs.
• Accesses, by computer, all of the properties for sale in your desired area. “For Sale” and newspaper ads are not always a true reflection of everything that is on the market. Your real estate agent knows everything that is available at a given time.
• Helps you negotiate. Once you’ve found the home you want to buy, your real estate agent will write up your offer and present it to the seller. This gives you the best opportunity to have your contract accepted.
• Gets the price right. Your real estate agent is a specialist who knows the market inside and out so you will get the best price possible.
• Allows you to make your own decisions. A professional agent works for you and respects your opinion. They will not try to force you into a decision you don’t feel comfortable with.
• Helps protect your rights. Real estate laws have become increasingly complicated. Therefore, your real estate agent is there to assist you in every way.
• Does not charge you anything. Your real estate agent’s services are absolutely free to you - the seller pays their commission.

Mortgage terms

To understand the mortgage process, you need to know the lingo. Here are some of the terms you’ll want to be familiar with:

Amortization

Means of loan payment by equal periodic payments calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance.

Annual Percentage Rate (APR)

The interest rate that reflects the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account points and other credit costs. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan, however all lenders do not calculate APR the same way.

Discount Points

Prepaid interest assessed at closing by the lender. Each point is equal to one percent of the loan amount, i.e., one point on a $100,000 mortgage would cost $1,000.

Earnest Money

Money given by a buyer to a seller as part of the purchase price to bind a transaction or assure payment.

Index

A published interest rate against which lenders measure the difference between the current interest rate on an adjustable rate mortgage and that earned by other

investments (such as one-year, three-year, and five-year US Treasury Security yields, the monthly average interest rate on loans closed by savings and loan institutions, and the monthly average Costs-of-Funds incurred by savings and loans) which is then used to adjust the interest rate on an adjustable mortgage up or down.

Margin

The amount a lender adds to the index on an adjustable rate mortgage to establish the adjusted interest rate.

Origination Fee

The fee charged by the lender for issuing a loan; usually computed as a percentage of face value of the loan.

Title Insurance

A policy usually issued by a title insurance company, which insures a home buyer against errors in the title search. The cost of the policy is usually a function of the value of the property, and is often borne by the purchaser and/or seller.