Your interest rate never changes. If you start at 6%, you stay at 6% for the next 15 or 30 years. It’s predictable and safe.
While the "20% down" rule is the gold standard (it helps you avoid private mortgage insurance), many programs allow for as little as 3% or 3.5% down. 2. Choosing Your Loan Type buying a house mortgage
In a competitive market, a "Pre-Approval Letter" is your golden ticket. It tells sellers that a bank has already vetted your finances and is ready to back your offer. Without it, most sellers won't even look at your bid. 5. The Finish Line: Closing Your interest rate never changes
Your monthly check to the bank isn't just paying back the house price. It’s usually a bundle called : Principal: The actual balance of the loan. Interest: What the bank charges you to borrow the money. Taxes: Property taxes collected by your local government. Insurance: Homeowners insurance to protect the asset. 4. Getting Pre-Approved While the "20% down" rule is the gold
Not all mortgages are built the same. The two most common paths are:
This is your financial "reputation." A higher score usually unlocks lower interest rates, which can save you tens of thousands of dollars over the life of the loan.
These often start with a lower "teaser" rate for a few years, but then the rate fluctuates based on the market. It’s a gamble that can pay off if you plan to sell quickly, but it’s risky if rates climb. 3. The Hidden Costs (The "PITI" Formula)