Buying a home is perhaps the most significant investment a consumer will ever make. This purchase is a momentous event that can also be confusing, frustrating and sometimes scary.
- Get prices of comparable homes in the area to help avoid paying too much.
- Have the property inspected by a licensed inspector. Visit the Arkansas Home Inspector Registration Board site for a list of registered inspectors.
- Obtain all relevant information when shopping for a mortgage, such as the interest rate, term, costs, and type of mortgage (fixed or adjustable rate).
- Research lenders for rates on the same type of loan and amount. Determine whether the interest rate is a fixed or adjustable rate. If it is an adjustable-rate, ask your lender when and how the interest rate and payment will change.
- Find out how much of a down payment is required. If it is less than 20 percent of the home’s purchase price, you will be required to purchase Private Mortgage Insurance (PMI). If PMI is required, ask how much the payment will be with PMI included and how long a PMI payment will be required.
- Ask if there is a penalty for paying off your loan early.
- It is likely that your mortgage will be transferred from one lender to another once, if not several times, during the life of the loan. Federal law now requires that your new lender or servicer notify you within 30 days of the loan transfer. See more information about the National Mortgage Settlement.
The U.S. Department of Housing and Urban Development (HUD) provides free counseling nationwide on how to buy a home. To contact the HUD office nearest you, call (800) 569-4287.