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The Four Elements of Home Mortgage Availability


The bad news is that it is well nigh impossible to qualify for a home mortgage unless you are rich.  Families with incomes just above $100,000 can barely pay their monthly bills, much less save any money to put toward a down payment.  The slightly more encouraging news is that your home mortgage is not just one financial obligation but four, even though it gets bundled together in one monthly payment.  Pessimists will quickly point out that all of these obligations are unaffordable unless you are already rich, and that any of them is less expensive if you already have the means to afford the others.  Optimists will notice, however, that it is possible to focus on a single one of them as your financial goal, and this can help you track your progress toward qualifying for a home mortgage loan.  A Miami foreclosure defense lawyer can help you if one or more components of your home mortgage loan are unaffordable.

Principal, Interest, Taxes, and Insurance Are Separate Variables

If you are in the early stages of your quest to qualify for a home mortgage, Hal Bundrick of Yahoo Finance encourages you to disregard all of the other acronyms that real estate agents might try to throw at you during the home buying process and concentrate on the acronym PITI, which stands for principal, interest, taxes, and insurance.  Here is what determines how expensive each of these components of your monthly mortgage payment will be:

  • Principal is the total amount that you borrow. Since home mortgage loans are the largest sum that most people borrow in their lifetime, and since the repayment terms tend to be a decade or more, you only pay a small portion of the principal each month.  To start with a lower principal amount, buy a less expensive property and place a larger down payment, so you have to borrow less money.  Unless you are already rich, both of those are easier said than done.
  • Interest is frighteningly expensive, because it compounds over such a long time. If you get a fixed rate mortgage, you don’t have to worry about the interest rate on your mortgage increasing.  Market-wide factors influence the interest rate, and so does your individual credit score.  If you already have a mortgage, paying more than the minimum payment on the principal each month decreases the total amount of interest you pay.
  • Taxes on your property are often bundled into your mortgage payment. The amount is based on the value of your property, not the principal amount, so placing a larger down payment does not decrease the property taxes.
  • Mortgage lenders often require homebuyers to buy homeowners’ insurance before they will issue the loan. Recently, homeowners’ insurance has become prohibitively expensive in Florida.

The component where affordability is within your control is principal, and to a lesser extent interest.  Taxes and insurance rates are outside your control.

Work With a Debt Lawyer About Qualifying for a Home Mortgage

A South Florida debt lawyer can help you qualify for a home mortgage or resolve problems with your existing mortgage.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.



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