Once you’ve identified your dream property, the task doesn’t stop there. In fact, it marks the beginning of a very lengthy process. You’ve to find the ideal mortgage deal. It’s highly likely that a mortgage is the biggest loan you’ll ever owe a lender. Therefore, you shouldn’t run into the deal until you are sure that it’s the best. You have to consult and research the online mortgage deals that interest you. It’s imperative that you inquire how the loans work, their rates, and the repayment period. To help you compare the various options, here is a quick guide to use:
1. Consult a Mortgage Broker
An experienced mortgage broker knows the lending market better. They have access to various lenders and loans such as VA, FH, conventional and jumbo loans. This means that they can help you comprehend the lending process and choose a mortgage deal that is flexible. The expert will also explain to you the fees charged and the risks involved. It’s their duty to clarify everything about the home deals.
2. Fixed-Rate Vs Adjustable-Rate Mortgage
A fixed-rate mortgage allows you to lock the rates for a specific period—10, 20, or 30 years. During the locking period, the payments that you make for the mortgage don’t change. Thus, you are guaranteed to pay a particular amount for the specified term. This option is great for individuals with a solid earning. As for an adjustable-rate mortgage, the rates change depending on the market. Since the rates are designed to fluctuate in the course of the repayment period, it’s not possible to estimate how much you’ll pay in the long run. The mortgage suits individuals who plan to sell the property at a later date before the repayment period expires.
3. Ask for Cost Estimates
The online lenders are legally obliged to give you the cost estimates for the mortgages before you agree to any. The cost approximations enable you to compare the prices and see what is affordable. A typical cost estimate is a three-page document which indicates the interest rates of the mortgage, the terms of repayment, and the closing costs.
4. Compare the Closing Costs
After you are provided with the cost estimates, the last thing to do before signing up for a specific mortgage is to compare the closing costs. Of course, you should talk to a trusted mortgage broker before deciding. In most cases, the rates are 2-5% of the property loan. Therefore, the lower the percentage, the cheaper the mortgage deal.
With the above mortgage guide, you should be able to compare the various home loans and choose one that suits your budget. Provided that you understand the Do’s and Don’ts of the mortgage process, it’s easy to own your dream house.