Financial Literacy

Whether it is your first home or you are looking to upgrade, regardless of your income, there is important information you need to know before you start looking for your new home.

There are nonprofit agencies throughout the state that offer free or low cost counseling to prepare you for the home buying process:

-Financial Management/Budget Counseling
-Pre-purchase Counseling
-Pre-purchase Homebuyer Education Workshops

Homeownership Education and Counseling Agencies

Before You Buy Questions 

The Process

Mortgage Information

Shop for a mortgage before you shop for your new home. Mortgages are just like any other major purchase so it is important to shop around and compare prices, rates and terms. Also make sure to do some research about available options. Below you will find information and resources to get you started.

Mortgage Loan Types

• Fixed Mortgage Loan - A fixed loan simply means the interest rate does not change over the life of the loan so the monthly payment is the same each month. Today there are fixed rate types of mortgage loans that have shorter terms like 15, 10 and even 5 years.
• Adjustable Rate Mortgage Loan - An adjustable rate mortgage loan, or ARM, is one of the types of mortgage loans that rises and falls with the current interest rate as determined by a variety of indices.
• Convertible Mortgage Loan - Convertible loans are the types of mortgage loans that are a fusion of the fixed rate and the adjustable rate mortgages. This type of loan is popular because it allows for more flexibility with mortgage loan options.
• FHA Loan and VA loan - The FHA and VA types of mortgage loans are available for special segments of the population. The Federal Housing Authority or FHA insures loans by lenders who lend to low or moderate income level people to help them purchase a home that they would not otherwise be able to afford.

Mortgage Terms

• Annual percentage rate (APR) is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fees, and certain other credit charges that the borrower is required to pay.
• Escrow is the holding of money or documents by a neutral third party prior to closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
• The interest rate is the cost of borrowing money expressed as a percentage rate. Interest rates can change because of market conditions.
• Loan origination fees are fees charged by the lender for processing the loan and are often expressed as a percentage of the loan amount.
• Lock-in refers to a written agreement guaranteeing a home buyer a specific interest rate on a home loan provided that the loan is closed within a certain period of time, such as 60 or 90 days.
• Overages are the difference between the lowest available price and any higher price that the home buyer agrees to pay for the loan. Loan officers and brokers are often allowed to keep some or all of this difference as extra compensation.
• Points are fees paid to the lender for the loan. One point equals 1 percent of the loan amount. Points are usually paid in cash at closing.
• Private mortgage insurance (PMI) protects the lender against a loss if a borrower defaults on the loan. It is usually required for loans in which the down payment is less than 20 percent of the sales price or, in a refinancing, when the amount financed is greater than 80 percent of the appraised value.
• Thrift institution is a general term for savings banks and savings and loan associations.
• Transaction, settlement, or closing costs may include application fees; title examination, abstract of title, title insurance, and property survey fees; fees for preparing deeds, mortgages, and settlement documents; attorneys’ fees; recording fees; and notary, appraisal, and credit report fees.

Mortgage Calculator: Calculate your adjustable mortgage payments 

Adjustable rate mortgages can provide attractive interest rates, but your payment is not fixed. This calculator helps you to determine what your adjustable mortgage payments may be.



For information on mortgages, resets, foreclosures and other home loan topics you can go to:

North Carolina Housing Finance Agency

The Affordable Housing Group

Housing and Urban Development

Community Reinvestment Association of North Carolina

Center For Responsible Lending

Information on Refinancing from the Federal Reserve

US Department of Housing and Urban Development

Home Protection Program

Online Credit Counseling

Office of the Commisioner of Banks