Conventional Mortgage:

This is the standard loan used by buyers with good to excellent credit who make down payments of at least 10%. However, there are programs that offer options for lower down payments based on buyer credit and location.

FHA Mortgage:

These loans often apply to buyers with lower credit scores, as they offer a down payment as low as 3.5% and lower interest rates. However, FHA mortgages do also require mortgage insurance premiums, which can result in higher overall costs.

VA Mortgage:

All veterans and active military members qualify for VA loans. These offer up to 100% financing, simplified loan approvals, and lower interest rates. They can be much lower than conventional loans.

USDA Mortgage:

These loans are available to buyers in rural or low-density areas and offer up to 100% financing and below-market interest rates. Their ideal buyers are of average means, have lower credit scores, and are buying modest homes. Additionally, because of the government's loose definition of the term "rural," some of the buyers in the smaller communities surrounding Cary, Apex, and Morrisville will qualify for this loan.

Principal:

This is the repayment of the initial amount you borrowed from your lender (in other words, the price of your home).

Interest:

This is a payment to the lender for the money borrowed (and is then added on to the initial price of your home).

Taxes:

Your annual city and county taxes assessed on your property are divided by the number of mortgage payments you make in a year and added into your mortgage.

Insurance:

Your monthly homeowner's insurance payment covers you against various hazards and is added to your mortgage payment.

Fixed-Rate Mortgage:

The interest on an FRM will not change, so your monthly payments won't change, making them very predictable.

Adjustable-Rate Mortgage:

The interest rate on an ARM will often be lower initially, but as interest rates do fluctuate with the market, they can be somewhat unpredictable or even result in higher payments.

Earnest money:

Think of this as your security deposit. It's paid when you submit your offer to show the seller that you are serious. When your offer is accepted, it is applied to your down payment or closing costs.

Down Payment:

This is determined by your loan, or possibly any government programs or assistance you have requested.

Closing Costs:

These are typically low for buyers and represent the fees associated with paperwork and lender charges.

Review Your Contract

Before you sign any paperwork, it's important that you carefully read over the contract with your agent or lawyer to ensure there are contingencies - that is, if something falls through with your mortgage, you aren't still obligated to buy the home.

Finalize Your Mortgage

Work with your chosen lender to submit your mortgage application, have your home appraised, and review predicted closing costs. There are many costs commonly associated with closing, including attorney fees, title insurance, appraisal fees, home inspection fees, courier fees, government recording fees, and taxes.

Pay, Close, and Get Keys!

It's time to close! Meet with your agent, lender, and the seller to finalize the paperwork, sign your contracts, and pay your down payment and closing costs. Finally - the keys to your new home!