Mortgages are secured loans used to buy homes or real estate. Buying a home is a major investment, so it's crucial to understand the terms and process.
Budgeting for a Home
Aim to spend no more than 30% of your gross income on housing. Consider other financial obligations, like student loans and car payments.
Steps to Buy a Home
- Get Prequalified: Obtain a prequalification letter to show you're a serious buyer.
- Find Your Home: Use a realtor to navigate the buying process.
- Secure Your Mortgage: Choose from conventional, FHA, physician or VA loans based on your needs.
- Close on Your Home: Obtain an inspection to ensure the property is in good condition. Purchase title insurance to protect against ownership disputes and homeowner's insurance to protect your investment.
Mortgage Key Terms
- Mortgage term: Length of time to hold the loan
- Down payment: Upfront cash payment towards home
- Fixed rate: Constant interest rate throughout the loan
- Adjustable rate (ARM): Lower initial interest rate that adjusts over time
- Private Mortgage Insurance (PMI): Required for down payments under 20%, protects lender
Tips
- Shop around for the best mortgage rates and terms.
- Read and understand your loan terms before signing.
- Homeownership is an exciting milestone. Research thoroughly and ask questions to navigate the process confidently.
MUSC students may self-enroll in our Brightspace Financial Literacy Course to learn more about the homebuying process.
