Pure Funding Guide to your Mortgage Plan  

A good mortgage plan has several key components that work together to ensure affordability, manageability, and long-term financial well-being. Here are the essential elements that Pure Funding can help make your home ownership dream come true:  

1. What can I afford?:  

• Realistic Budget: Determine how much you can comfortably afford for a monthly mortgage payment, considering all your other financial obligations (debts, living expenses, savings goals). Don't just focus on the maximum you might qualify for.  

• Down Payment: A larger down payment reduces the loan amount, potentially leading to lower monthly payments, a better interest rate, and avoidance of Private Mortgage Insurance (PMI). Less than 20% down will require PMI on most loans.  

• Closing Costs: Factor in all upfront costs associated with the mortgage, such as appraisal fees, title insurance, origination fees, discount points, homeowners insurance, and taxes.  

2. Choosing the Right Mortgage Product:  

• Fixed-Rate vs. Adjustable-Rate:   

• Fixed-Rate: Offers stable interest rates and predictable monthly payments for the life of the loan. Ideal for long-term homeowners who prefer budget certainty.  

• Adjustable-Rate (ARM): Starts with a lower interest rate for a specific period, after which the rate adjusts based on market conditions. It can be beneficial for those planning to move or refinance within the initial fixed-rate period, but carries the risk of payment increases. (Typically for experienced clients and understand the potential risks of these products).  

• Loan Term: Common terms are 15, 20, or 30 years. A shorter term means higher monthly payments but less total interest paid over the life of the loan, allowing you to build equity faster. A longer term results in lower monthly payments but more interest paid overall.  

• Loan Type: Explore different loan types to see which best suits your situation:   

• Conventional Loans: Not government-backed, often requires a higher credit score and down payment.  

• FHA Loans (Federal Housing Administration): Insured by the government, often has lower down payment and credit score requirements, but typically requires mortgage insurance.  

• VA Loans (Department of Veterans Affairs): For eligible veterans and active-duty military, often with no down payment and no private mortgage insurance.  

• USDA (U.S. Department of Agriculture): For eligible rural and suburban homebuyers, often with no down payment.  

• Jumbo Loans: For loan amounts exceeding conventional loan limits.  

• Non-QM Loans: Designed for borrowers that do not meet traditional lending requirements: Self-employed borrowers, Investors,   

3. Securing a Favorable Interest Rate and Terms:  

• Credit Score: A higher credit score typically qualifies you for lower interest rates. Review your credit report and address any errors before applying for a mortgage.  

• Understand APR: Pay attention to the Annual Percentage Rate (APR), which includes the interest rate plus other loan costs, providing a more accurate picture of the total cost of borrowing.  

• Down Payment: For mortgages, making a larger down payment can reduce the loan amount and the lender's risk, potentially leading to a lower interest rate.  

4. Understanding All Costs and Fees:  

• Principal and Interest (P&I): The core of your monthly payment.  

• Property Taxes: Often included in your monthly payment and held in escrow.  

• Homeowners Insurance: Also usually included in your monthly payment and held in escrow.  

• Private Mortgage Insurance (PMI): Required by most lenders if your down payment is less than 20% on a conventional loan.  

• Escrow Account: Understand how your lender manages property taxes and homeowners insurance through an escrow account.  

5. Flexibility and Future Planning:  

• Prepayment Options: Check if there are any penalties for making extra payments or paying off the mortgage early.  

• Refinancing Potential: Consider how future interest rate changes might affect your ability or desire to refinance.  

6. Tools to help you through your mortgage plan:   

· Sign up for your Home Wealth Report: Contact your loan officer for link.  

· Protect your credit and personal information: OptOutPrescreen.com  

· Get your annual credit report: https://www.annualcreditreport.com/index.action  

In summary, a good mortgage plan is tailored to your individual financial situation, considers both short-term affordability and long-term costs, and provides a clear understanding of all the terms and obligations involved.