primelending in athens ga
Commonly Asked Questions About Mortgages And Real Estate Transactions
In Georgia, new home buyers aren't knowledgeable about the common practices involved in purchasing a home. For this reason, they need clear answers about common occurrences during this process. The following are commonly asked questions about mortgages and real estate transactions.
How is Affordability Established?
Lenders must establish affordability before extending home loans. To establish the buyer's ability to pay, the lender must assess their income. This process involves the establishment of an income-to-debt ratio. Each home loan product has specific requirements for these ratios as well as the buyer's credit rating. With the income-to-debt ratio, the lender determines what value they can afford. This value is identified by assessing the buyer's monthly obligations plus the mortgage and insurance requirements. Next, this value is compared to their incoming earnings each month.
Why Do You Need a Property Inspection?
A property inspection is conducted primarily to determine if there are any existing issues with the property. These issues include faulty wiring, foundation damage, nonfunctional HVAC systems, and any additional conditions that lower the value. For the lender, this information determines if the property is worth the selling price. If the findings of the inspection determine that the property isn't worth the asking price, they can refer financing.
Why Do Some Banks Require Mortgage Insurance?
Mortgage insurance isn't the same as homeowner's insurance. It doesn't guarantee the replacement of the property if it is a total loss. This insurance provides the lender with a refund of their investment. If the borrower defaults on the mortgage, this insurance provides the mortgage company with the total value of the mortgage.
Who Decides What Level of Homeowner's Insurance Coverage You Need?
The lender provides the least amount of coverage that is acceptable. However, it is ultimately up to the buyer if they obtain further coverage. If the property is in flood zone, they will need flood insurance along with homeowner's coverage.
In Georgia, new home buyers discuss the requirements for obtaining a mortgage with their lender. These lenders must establish affordability based on new federal laws. Buyers who are ready to start the process contact primelending in athens ga today.