You need a home – Period. No matter how your career is shaping up., buying a home is almost a necessity at some point. However, with real estate prices getting more insane by the day, most prospective homebuyers have their doubts, especially with regards to mortgage options and payments. In this post, we take a look at some of the aspects you need to know about mortgages.
- Start with what you can afford. Keep in mind that you cannot commit to pay 70% of your salary to installments, and that’s because banks will only accept what’s acceptable. You can keep that around 40-50% of your salary, and with that in consideration, get an idea of what you can really afford.
- Ask about the options. From fixed-rate and adjustable rate mortgages to balloon mortgages, there are a wide range of choices to pick from. You also need to understand how different mortgage payments are calculated. Here’s a great article to mortgage calculator formula. Use such calculators for a better idea.
- Your credit score matters. Regardless of how small the loan may be; your credit score will matter. If you plan to buy a house, make sure that all bills, dues and payments are on time. You will have a good time dealing with lenders about the interest rate when the credit score is your favor.
- Cheapest rate doesn’t always mean the best deal. Yes, that’s true. Artificial reduction in mortgage rates is nothing new, and while it may seem that you are getting a pretty good deal on paper, you might be paying more for it. The simple rule with mortgages is to think of the long run and what the particular property is finally costing you.
- Your situation is unique. Appreciate that. No two people get the same rates, terms and conditions from lenders, because every property is different and requires a unique payment. The EMI may change in case of adjustable rate mortgages, so you have to think of your employment status and ability to pay more, if required.
There are no hard and fast rules with regards to mortgages, but initial research always comes in handy. You have to understand what you can afford, if the property is worth evaluating the price and must negotiate things with the lender. Most home buyers don’t understand that they can discuss things and get better, favorable terms if they discuss things with the mortgage lender.