Homebuyer FAQ
Preferred Lender - Element Funding
How do I know how much house I can afford?
You generally can purchase a home with a value of two or three times you annual household income. However, the amount that you can borrow also depends on your employment history, credit history, current savings and debt, and the amount of downpayment you are willing or able to make. If you are a first time buyer, you may be able to take advantage of special loan programs to help you purchase a home with a higher value.
When you buy a Peachtree home, we work with you to help you determine exactly how much you can afford.
What does my mortgage payment include?
For most homeowners, the monthly mortgage payments cover three separate areas:
- Principal
- Repayment on the amount of money borrowed to purchase the home.
- Interest
- Payment to the lender for the amount of money borrowed.
- Escrow (taxes and insurance)
- Part of your mortgage payment will be placed in an escrow fund. The amount is based on your estimated property taxes and Homeowners Insurance for the upcoming year. This additional money covers items like hazard insurance and property taxes and is paid by your mortgage lender directly to the County Tax Assessor and property insurance company.
How do I know what type of mortgage is best for me?
There are several types of mortgages to consider when you buy a home, but the three main options are fixed-rate mortgages, adjustable-rate mortgages (ARM), and interest-only loans.
- With a fixed-rate mortgage , the interest rate for your mortgage payment stays the same during the life of the loan. This means that your monthly payments on a fixed-rate mortgage will remain relatively stable. Oftentimes, fixed-rate mortgages will be given on a term basis, such as a 30-year or 15-year loan.
- With an Adjustable-Rate Mortgage (ARM), the interest rate changes periodically, typically in relation to an index. This causes your monthly payments on an ARM loan to change.
- With an Interest-Only Mortgage, your monthly payments only cover the interest on the loan amount, which helps you keep payments relatively low. At the end of the term, usually five to seven years, you can refinance, pay the balance of the mortgage in a lump sum, or begin paying off the principal (which can cause your payments to increase significantly).
Each type of mortgage has its own advantages and disadvantages, and a professional mortgage lender can help you decide which option is best for you.
Who should I choose as a mortgage lender?
While you can choose to go directly to a bank or a mortgage broker, Peachtree offers one preferred lender, Element Funding, that can help you evaluate your choices and make the most appropriate decision. To learn more about Peachtree Communities' Preferred Lenders, visit the Financing page
How much should I expect to pay up front when buying a house?
The amount of money you will have to put down depends on a number of things. Generally, you will need to provide the following:
- Earnest money
- An initial deposit paid to the builder that shows your commitment to buying your new home. This money is used as part of your total payment at closing. If your contract does not close, the earnest money may be refunded. However, a builder does have the right to retain the money under certain conditions. This information will be provided in your contract.
- Downpayment
- Peachtree Communities' preferred lenders offer a multitude of programs to fit your needs. Many of which require Zero Down Payment.
- Closing costs
- Additional costs may be associated with processing the paperwork needed to purchase a home. These costs can include, but are not limited to, origination fees and discount points, lender and broker fees, escrow and prepaid interest, title company fees, State and County fees, cash to close, and proposed monthly payment. When you apply to purchase a home, you will be given an estimate for these costs. While they may not be the exact figures paid at closing, your lender should be able to approximate the total closely.
Do I need Homeowners Insurance? What does it cover and how much does it cost?
Homeowners Insurance is required for any home purchased using a lender, and you can choose any insurance company that offers a policy that fits your needs. There are several types of policies available that provide various levels of coverage. However, for the most part, homeowners insurance covers loss caused by fire, some natural causes, and vandalism, as well as personal liability (injury to someone else while on your property), theft away from home, and most common disasters.
Homeowners insurance premiums are based on the location of the home, the cost of the home and its belongings, the property value, and the amount of coverage you choose through your individual policy. You can expect to be charged for coverage that offers replacement value based on your home and lot. Insurers use a standard valuation calculation to estimate the replacement value – these calculations should not vary from provider to provider.
Should I retain a lawyer to help me with the purchase of my home?
You do not have to hire a lawyer to advise you on the purchase of your home, but you are allowed to retain one and have him or her attend the closing. The mortgage company and the builder will have their own lawyers at the settlement meeting, as law requires an attorney to oversee and execute the final sales transaction during a closing. This "closing attorney" usually represents the lender, and the fees for this individual’s services are part of your closing costs.
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