What To Know About Yourself In Advance

Your credit report: You must know how you stand and whether everything it contains is accurate and updated. If not, have it corrected. Next comes how much you want to spend on your new home, whether you need to make a down payment or not and as a consequence of that, how much you need to ask for.

Related to this point is the period of the loan, which determines the monthly payment, adjusted to your budget. This should be done before shopping for a loan, since you want to know what you need and therefore, what to ask the lender for. Then comes the part where you determine the adequate lender for you.

Taking Some Necessary Precautions

If you are a credit card holder and have several with an outstanding balance, you might want to pay off some and leave the essential ones, not more than three. This decreases the amount of debt you have, giving you a better credit rating.

Saving time is also a necessary precaution. Get your loan pre-approved first and THEN start shopping for a house.

What To Know About The Mortgage Loan

Well, the outstanding points are that a mortgage loan is of low risk to your lender, since it is backed by the property you are buying. On the other hand, you risk the loss of the property if you do not pay the loan. However, the payment terms are long, making the installments smaller and easier to pay, reducing the risk of default.

Find out the APR, what fees it includes and how it affects your monthly payments. Do not evaluate a loan only for the APR, which is not just the interest rate by itself.

And Now, The Lender

The loan you are looking for is a long term one, so if you make a bad deal, you will be sorry for a long time! Get free quotes before applying for real and when you do, ask for a copy of the contract to take home and read carefully. If you are denied this right or are urged to sign up, just be calm, say good-bye and look for another lender.

Last Considerations

As I have said above, lack of knowledge is no excuse for a bad deal. You have the obligation to find out what expenses there are and account for such items as closing fees, application fees, and everything NOT included in the APR. Escrow is another item to consider, since there might be a middle party connecting you to the seller.

Last but not least, there should be a life insurance and probably an additional mortgage insurance, to cover the payments in case of the borrower’s death and a payment default due to unexpected events, respectively. Leave no stone unturned. A little effort now will make all the difference in the world in the future.