Financing Your Dallas Home Purchase

By dallasrealtor | November 11, 2008

Unless you are in a position to pay all cash for your home, you will need to obtain a home loan (mortgage) to complete the purchase.  Your Dallas real estate agent should assist you in this process to help ensure that you obtain the financing that meets your needs.  Sometimes real estate offices have their own in-house mortgage companies.  This makes the process smoother and promotes business from within.  Other times they can refer you to a mortgage company or banking institution which they have done business with in the past.  Also, based on what you think your credit is like, they can cut out any middle man and send you directly to the appropriate lender whom they know will provide the best financing needs for your situation.

Being pre-approved for a loan before you submit an offer will put you in a stronger negotiating position and can save time in the loan approval process.  Your Dallas real estate agent typically has relationships with mortgage companies and can put you in touch with an experienced loan officer.

You should be aware that a mortgage payment can contain several components:

Principal – The original balance of money loaned.  As the loan is paid over time, the principal is the remaining loan balance.

Interest – The charge for the use (loan) of the money.  The interest rate remains constant in a Fixed Rate Mortgage.  The rate can vary according to specified guidelines over the life of an Adjustable Rate Mortgage (ARM).

Property Taxes – The county assessor typically charges property taxes based on the value of your home.

Insurance – Protection against loss resulting from certain hazards, such as theft or fire.  The standard policy pays replacement costs, minus depreciation based on actual cash value.  You will need to obtain homeowners insurance from your insurance agent.

Private Mortgage Insurance (PMI) – Loans with smaller down payments involve greater risk for the lender, who requires protection in case the loan goes into foreclosure.  Without PMI, lenders would be reluctant to offer loans with lower down payments.  Anything less than 20% down payment usually requires PMI.

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