It’s true! House hunting is all fun and game until you get down to the topic of payments and fees. Let’s get to it then. In this article, we’ll talk about how you can save big bucks by choosing the right home loan for you – plus the basics of getting that mortgage for your future home.
Looking and choosing a mortgage lender is more than just finding one with a low-interest rate. You need one that understands your situation, an entity with staff that can walk you expertly through the entire process.
Know how much mortgage you can safely afford
Most financing institutions will look at your capability to pay as their baseline for approving or declining your request. Your capacity to pay and the debt-to-income ratio will be inspected. This means that if you get qualified for a loan, you need to make more than enough to cover both the mortgage and your living expenses. Lender bases their interest rate on this ratio as well.
Save up for a size-able down payment
There’s a simple match for determining the amount of down payment you need to put down for a home. In general, the more you save and put down for a down payment, the lower your interest rates and monthly mortgage will be. Higher down payment will also boost your chances of having your home loan approved. You should try to pay at least 20% of your dream home’s price upfront.
Try not to take the first home loan offer you receive
After choosing a dream home, your broker or agent will instantly recommend preferred lending companies or banks. Oftentimes the agent makes money from referrals to lenders. Therefore, you should research and not take the first home loan offer you receive. You might miss out on lower interest rates and fees elsewhere.
How long are you planning to live in your new place
Are you buying the property knowing that you will move out after a couple of years? Or perhaps you want the possibility of having an investment property that you can use as retirement home as well? These are crucial considerations since you need to choose between variable and fixed interest rates.
Variable rates will get repricing after a pre-set date, while fixed interest rates will remain the same throughout the remainder of the loan term and will not be affected by the market. You should try to lock in a fixed interest rate based on how long you expect to pay for your new home.
To ease the process of finding your home loan options, you can make use of online loan portals, which will let you know the options you qualify for, straight from your mobile phone or PC. You have the power to quickly shop around for options without lining up or getting put on hold.
Understand that buying a home leads you into mortgage payment for 10, 20, or 30 years! With that in mind, it’s vital to choose the right – if not the best mortgage lender out there with the lowest fixed rate home loan that will fit your repayment capabilities and preferences.
Best of luck!