Now that you have decided to buy a house in Southlake real estate, you should first look for a mortgage loan and get pre-approved, even before you shop around. This is one way of increasing your chances of getting your offer accepted by most sellers.

There are three loan categories, in general, that are available to home buyers: government or private, adjustable or fixed rate, and new loan or assumable.

1. Government or Private Loans

The money from government loans like FHA and VA loans aren't really lent by the government but instead, guarantees to repay lenders in case of non-payment. These mortgage loans have pros -- they demand a lower earnest money deposit compared to other loans and often possess lower points or rates of interest. The cons: they have a particular limitation on the amount that can be borrowed, the process takes longer, and the closing costs are higher at times.

The majority of loans are created by private institutions; for instance, mortgage companies, banks, and savings institutions. Lenders, in general, call for borrowers to get mortgage insurance, particularly if the down payment is low. This is due to the fact that such insurance gives the lender some degree of security in case the borrower fails to pay. The insurance might be put in to the amount of loan or financed at closing.

2. Adjustable or Fixed Rate Loans

Adjustable rate mortgages, also referred to as ARMs, have payments every month or rates of interest that vary over time; it may go up or go down. Normally, these loans start with lower payments every month, rates of interest, points and fees if compared to a fixed rate. Because of this, ARMs usually charm first time home buyers and young couples who are anticipating that their earnings would rise, and also to those individuals who do not have that much cash to make payments for deposit and closing expenses.

If you prefer this kind of mortgage loan, make sure to tell the lender to have the terms fully explained to you. You ought to ask about the index that would be utilized to work out the rates of interest in the future, how the index charges would affect your loan, and the cap on the interest rate or the maximum limitation on how much the interest rates would be charged to you regardless of how high it goes in the marketplace.

In contrast, on fixed rate mortgages, as its name implies, the rate of interest does not alter throughout the life of the loan, which can be from 10 years up to 50 years. This means the amount that you need to pay will remain the same, with the exclusion of alterations on the insurance and taxes.

3. New or Assumable Loans

In addition, you may select between a new loan or an assumable one in the process of purchasing a house from the available Southlake homes for sale. This indicates that you may possibly get a new loan or assume a loan that is already existent, which are usually on the same terms and conditions as the last owner. Some examples of assumable loans are FHA loans, VA loans, and other adjustable rate loans.