Buying a house is one of the biggest purchases you will ever make in your life. As such, you need to make sure that you can finance the deal before you start looking at houses. Unless you have saved enough money to pay for the property in cash, you’ll need to apply for a home loan.
Looking for the right home loan? Here are 4 important things you need to consider when shopping for a mortgage.
A mortgage is likely the largest debt you will take on in your lifetime, so you’ll want to shop, compare and negotiate with lenders to obtain the best deal possible.
Not all lenders offer the same loans, so it is a good idea to talk to several mortgage brokers or lenders before you finalize on a home loan. Remember, mortgages have a term of about 15 to 30 years, so you want to make sure you’re working with the right lender.
Length of time
Before anything else, we suggest that you take a moment and decide how long a term you need. Will you be able to pay the entire amount in just 15 years? Or you want to make it 30 years?
A 30 year loan may seem like a great deal. It makes it possible for you to finance a slightly more expensive home and will require you to pay a smaller monthly mortgage payment. However, you also have to consider the amount of interest you’ll have to pay in the end.
Now that you have made up your mind about the length of the term, it’s time to decide whether you’re going for a fixed or adjustable loan.
If you choose a fixed rate loan, then the interest rate will go unchanged until the end of the term despite the improvement of the market conditions. In case of an adjustable rate mortgage, your interest rate is dependent on factors such as the state of the economy, market conditions and your credit profile. If you think the interest rate may rise in the future, opt for a fixed rate loan.