You searched for months and have finally found the perfect home. One problem: there’s a little thing called a mortgage that stands in your way before you can pack up and move on in. For many people, the word “mortgage” sends a chill down their spines. But it does not have to. Here are a few tricks that will make the process of getting a mortgage a whole lot easier, and will get you into your dream home with a smile on your face.
The first tip is to shop around. Compare what the different lenders are offering. They are not always the same. Check the newspaper to compare interest rates and for the web savvy, check the Internet. With the Internet, the legwork is done for you. You can now compare a bunch of different lenders online, and find the one that best fits you needs.
But you do not always have to head for the lowest rate. Here is why. Most people only stay in their homes, on average, for seven years. Many banks and mortgage companies know this, and will charge you more up front, in the form of points (points are a percentage of the loan, paid up front. For example, two points on a $100,000 is $2000 that you would have to pay before you move in) and higher closing costs.
Also, you should look at a number of different kinds of loans. The traditional loan is a 30 year fixed rate loan where the interest rate will never go up and will never go down. Try looking into adjustable rates. Adjustable rates are loans where the interest rates are locked for a period of time… say five years… and then rise or fall in accordance with the market. Adjustable rates are also lower than fixed rates. So if you know that you will not be living in your house five years form now, an adjustable rate is definitely worth looking into. If you plan to stay in you home after the adjustable time period is up, you can also refinance your loan at that time. If an adjustable rate is being considered, ask the lender for the ceiling on the rate for a given year as well as over the life of the loan.
Buying a house can be a scary thing. But with a little work and research, you should be able to move in without the financial headaches.
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