A mortgage purchase loan is a type of loan that allows you to borrow money to buy a home. The home itself serves as collateral for the loan. This means that if you fail to repay the loan, the lender can take possession of the home and sell it to recoup their losses.

By understanding the key features and types of mortgage purchase loans, you can make informed decisions when buying a home.

Key Features of a Mortgage Purchase Loan:

  1. Down Payment: You typically need to make a down payment, which is a portion of the home's purchase price that you pay upfront. The size of the down payment can affect your interest rate and the amount you'll need to borrow.
  2. Interest Rate: The interest rate determines how much you'll pay in interest over the life of the loan. Interest rates can vary depending on factors such as your credit score, the type of loan, and current market conditions.
  3. Loan Term: The loan term is the length of time you have to repay the loan. Common terms include 15, 20, and 30 years.
  4. Monthly Payments: Your monthly payments consist of both principal and interest. The principal portion goes towards paying off the loan balance, while the interest portion is the cost of borrowing the money. This can also include Escrows/Impounds which can include taxes and homeowner’s insurance.
  5. Closing Costs: In addition to the down payment, you'll also need to pay closing costs, which are fees associated with the home purchase process. These fees can include appraisal fees, title insurance, attorney fees, lender fees, inspections, and other fees.

Important Considerations:

  • Affordability: It's crucial to ensure that you can afford the monthly mortgage payments, including property taxes and homeowner’s insurance.
  • Credit Score: Your credit score plays a significant role in determining your interest rate and eligibility for different loan programs.
  • Down Payment: A larger down payment can help you secure a lower interest rate and reduce your monthly payments.
  • Closing Costs: Factor in closing costs when budgeting for your home purchase.
  • Mortgage Insurance: If you put down less than 20% on a conventional loan, you'll typically need to pay for private mortgage insurance (PMI)

Popular Types of Mortgage Purchase Loans:

  • Conventional Loans: These are loans that are not backed by the government. They typically require a good credit score and a larger down payment.
  • FHA Loans: These loans are insured by the Federal Housing Administration (FHA) and are designed to help first-time homebuyers with lower credit scores and down payments.
  • VA Loans: These loans are guaranteed by the Department of Veterans Affairs (VA) and are available to eligible veterans and military personnel.
  • USDA Loans: A USDA loan, or United States Department of Agriculture loan, is a government-backed mortgage program designed to promote homeownership in rural areas.

A mortgage purchase loan can be a powerful tool for homeownership, but it’s important to weigh the pros and cons carefully.

Pros:

  • Homeownership: The most significant advantage is the opportunity to own a home, a valuable asset that can appreciate over time.
  • Tax Benefits: In many jurisdictions, mortgage interest payments are tax-deductible, providing potential savings.
  • Forced Savings: Regular mortgage payments can help you build wealth over time.
  • Stability: Owning a home can provide a sense of stability and security.
  • Potential Appreciation: As property values increase, your home equity grows

Cons:

  • Debt Burden: A mortgage is a long-term debt commitment that can limit financial flexibility.
  • Interest Costs: Over the life of the loan, you'll pay significant interest costs.
  • Risk of Foreclosure: Failure to make timely payments can lead to foreclosure, resulting in the loss of your home.
  • Property Taxes and Insurance: In addition to the mortgage payment, you’ll have ongoing costs for property taxes and homeowner’s insurance.
  • Market Fluctuations: If the housing market declines, your home's value may decrease, potentially impacting your equity.

Explore Our Wide Selection of Purchase Options

At Local Lending Oklahoma, we don’t think it should be difficult to purchase a home. Keeping this in mind, we provide our clients with a wide selection of purchase loan options. Our licensed professionals understand that most of our clients enter the real estate market with unique financial goals and restrictions. Thankfully, our staff members will remain by your side throughout each stage of the borrowing process to ensure you access to the perfect purchase loan and down payment options.

Versatile Assistance in the Yukon, Mustang & Oklahoma City, OK Areas

Our mortgage loan originator, Dean Slatev, has multiple years of experience assisting first-time buyers throughout the local region. He’s handled countless transactions in the past and understands how to tailor the perfect purchase loan options in prompt fashion. All you need to do is reach out to schedule a preliminary consultation with our mortgage professionals at Local Lending Oklahoma.

Contact Our Team to Access the Perfect Purchase Options

If you’re interested in learning more about our current purchase options, don’t waste another moment. Contact one of the knowledgeable team members at Local Lending Oklahoma to get started. It doesn’t matter whether you’re purchasing your first home, vacation home, investment property, or transitioning into your next space; our financial team is available to assist all sorts of clients throughout the Yukon, Deer Creek, Tuttle, Piedmont, Choctaw, and Oklahoma City, OK areas.