How to Navigate Your First Time Getting a Home Loan
Home Loan
Mortgages, home loans, and financing can be a little complicated. They involve a lot of jargon, and no one wants to get ripped off. The key is to educate yourself before you even start looking for a house.
Your mortgage broker will have the final say, but here are some basic things you should know before applying for a mortgage loan.
Here are some of the ways to navigate your first time getting a home loan.
Budgeting
This is the most important thing when looking to buy a house. You need to determine how much of a down payment you can afford, how much house you will be able to afford, and how much money you will be spending on monthly payments.
If your broker says you want to get into a 15-year mortgage, take a step back and ask yourself if it is even worth it. The interest rate will be much lower, but you will also have to pay more in the long run.
Calculate How Much House You Can Afford
You are probably looking at the mortgage calculator. This is a good tool, but it will not tell you everything you need to know.
Just look at the mortgage calculator and ensure it will cover your monthly payments.
If there are any additional expenses on top of that, you need to look into other ways to pay for them, such as using your savings or an extra part-time income stream.
However, if they are not that high, you can probably afford to pay for them with your existing income if you need to.
Start With the Lowest Down Payment
For most people, this will be the 20% down payment requirement. However, other options allow you to put much less than that down.
You should start with this option first because it will allow you to keep your monthly payments low enough to afford them every month.
However, you need to ask your broker how much this would be. You should also ensure that the 20% down payment is enough to cover all closing costs.
Many people find out after they have already moved in that they do not have enough money left over to cover their closing costs because they bought a house with more than they could afford.
Look Into Paying Points on Your Loan
Mortgage brokers will tell you that paying points on your loan is better because they are cheaper upfront.
However, be sure to ask them when looking at the different mortgage choices for paying for points. If you pay them all at once, there will be a penalty fee when looking to refinance.
Home loans are for home payments, so if you pay off the entire loan, you will have nothing left to buy your new home.
The points are meant to be paid overtime for the borrower to be able to afford their house and save enough money to buy their next house.
It is important to make sure that you take the time to educate yourself before you head out to look at homes.
It will give you the confidence you need to find a home that fits your needs.
You want to go into this with as much information as possible to make an informed decision.
Category: Loans
