Your Guide to Home Buying and Homeownership

Buying a home is one of the most significant financial decisions you'll ever make. Whether you're a first-time homebuyer or a seasoned homeowner looking to upgrade, understanding the home buying process is essential for making informed decisions and achieving your homeownership goals. From shopping for mortgages to navigating realtor fees and closing costs, here's everything you need to know about buying a home:

 1. Shopping for Mortgages

A mortgage is a loan that you take out to purchase a home. When shopping for mortgages, it's essential to compare interest rates, loan terms, and fees from different lenders to find the best deal. Here are some key factors to consider:

 a. Fixed-Rate vs. Adjustable-Rate Mortgages:

- Fixed-Rate Mortgage: With a fixed-rate mortgage, the interest rate remains the same throughout the life of the loan, providing predictability and stability in your monthly payments.

- Adjustable-Rate Mortgage (ARM): An adjustable-rate mortgage typically offers a lower initial interest rate, but the rate can adjust periodically based on market conditions, potentially increasing your monthly payments.

 b. Loan Term:

The loan term refers to the length of time you have to repay the loan. Common loan terms include 15, 20, and 30 years. A shorter loan term typically results in higher monthly payments but lower overall interest costs, while a longer loan term results in lower monthly payments but higher overall interest costs.

 c. Down Payment:

The down payment is the initial upfront payment you make toward the purchase price of the home. While the traditional down payment is 20% of the home's purchase price, there are many loan programs available that require lower down payments, such as FHA loans (3.5% down) and VA loans (0% down for qualifying veterans).

 2. Interest Rates

The interest rate on your mortgage has a significant impact on your monthly payments and the total cost of homeownership over time. Factors that influence interest rates include:

- Credit Score: A higher credit score typically results in a lower interest rate, as it indicates lower risk to the lender.

- Loan Term: Shorter loan terms typically have lower interest rates than longer loan terms.

- Economic Factors: Interest rates can fluctuate based on economic conditions, including inflation, the Federal Reserve's monetary policy, and the overall health of the economy.

 3. Different Types of Loans

There are several types of mortgage loans available to homebuyers, each with its own eligibility requirements and benefits:

- Conventional Loans: Conventional loans are not insured or guaranteed by the government and typically require a higher credit score and down payment than government-backed loans.

- FHA Loans: FHA loans are insured by the Federal Housing Administration and are popular among first-time homebuyers and those with less-than-perfect credit.

- VA Loans: VA loans are available to qualifying veterans, active-duty service members, and eligible spouses and require no down payment.

- USDA Loans: USDA loans are backed by the U.S. Department of Agriculture and are available to homebuyers purchasing homes in eligible rural areas.

 4. Realtor Fees and Closing Costs

In addition to the purchase price of the home and the down payment, homebuyers should budget for realtor fees and closing costs. Realtor fees typically range from 5% to 6% of the purchase price and cover the cost of hiring a real estate agent to help you buy or sell a home.

Closing costs are the fees and expenses associated with finalizing the home purchase transaction and typically range from 2% to 5% of the purchase price. Closing costs may include:

- Loan Origination Fees

- Appraisal Fees

- Title Insurance

- Home Inspection Fees

- Recording Fees

- Property Taxes

All in all…

Buying a home is a significant financial commitment, but with careful planning and research, it can also be an incredibly rewarding experience. By shopping for mortgages, understanding interest rates and different types of loans, and budgeting for realtor fees and closing costs, you can make informed decisions and achieve your homeownership goals.

Whether you're a first-time homebuyer or a seasoned homeowner, the key to successful home buying is knowledge and preparation. By educating yourself about the home buying process and working with experienced professionals, you can navigate the complexities of buying a home with confidence and peace of mind.

IMPORTANT DISCLOSURES

The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice. The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. BAL-24-31