Four Things To Consider When Taking Out A Mortgage


Buying a house is truly a life-changing event, especially for the first time buyer. This can be an overwhelming situation; physically, financially and emotionally. You can avoid some set-backs by considering every aspect of your finances and paying careful attention to a few things before deciding to buy a house. Real estate agents have tip sheets and check lists available for new home buyers to see if you qualify for a mortgage.

Tip Number One Involves Your Income

Do you have enough income to allow at least one third of your paycheck for your mortgage payment after everything else is paid? Consider all additional expenses you will have with a new house. If you have lived with your parents or in an apartment up until now, you must calculate many costs into your budget that you may have taken for granted. Water, sewage, electricity, telephone, internet, television, and maybe HOA, Home Owners Association, fees will take another big chunk out of your income. Your agent will let you know whether your new home is in a HOA neighborhood.

The Second Consideration Is About The Interest Rate Of Your Mortgage

Real estate agents can provide several choices of financial institutions for you, where you can apply for a mortgage. You may have to shop around for banks, savings and loan companies or credit unions that have the cheapest interest rate. If you have served in the Armed Forces, you may be eligible for a mortgage under the G.I. Bill. It can be bothersome to do all that legwork and you may not think it is a big deal whether you pay one or two per cent higher interest than need be. Think of it this way: Good interest rates can shave tens of thousands from the amount you will have paid when you pay off your home. That is certainly worth a few phone calls.

What Is Your Credit Rating?

This is the clincher where many young people become disappointed and disillusioned. The kind of interest percentage you get from your bank depends heavily on the ratings of your past credit history. Missing payments or not paying some bills at all will bring you to the lower end of the rating scale. If you want to disclose your financial situation to your real estate agent, he can give you a good idea whether or not you will qualify for a loan. Both your agent and the loan officer of the bank can advise you on how to increase your chances to get a loan application approved. To find out about your credit rating before you apply for a loan, go on the internet and get your free credit rating from all three institutions that create credit reports.

The Fourth Consideration For A Loan Is To Lock In A Good Interest Rate

So now you have a bank that approved your loan. You have a great interest rate. You want to make sure it stays that way. Get a fixed interest rate. This way, your rate will stay the same even if the market fluctuates upward. It will also stay the same if interest rates fall. That’s the gamble with a fixed rate. Either way, make sure you consider all the pros and cons.

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