What You Need To Know Before Buying a House
Buying your first home is an exciting and life-changing step. While you’re young and less settled, you usually rent houses or apartments but over time, that monthly payments starts to seem a bit wasted. Buying your own home means your monthly payments go into something you will keep and invest into, making it easier to get onto the property ladder. Not to mention all of the cherished memories you will create in your new home. But before you decide to make this great leap, you must consider various things before taking out a mortgage:
Don’t Overestimate the Term “Prequalified”
Don’t get too excited if a lender tells you that you’re prequalified, so your mortgage is in the bag. Sometimes they will pre-approve you simply based on what you’ve told them, but this isn’t a legitimate way to make sure you can get a mortgage. Have the lender look at your financial documents to make sure you can actually be approved for a loan.
How to Reduce Your Debt
The last thing you want when taking on a mortgage payment is tons of other debt weighing you down. You’re going to be putting a significant amount of money towards your house each month, so make sure you can handle your student loans, car payments and credit card bills in addition to this. If you’re still weighed down by these debts, it might not be the right time to purchase a home.
Know What You’re Paying For
Rather than just accepting your mortgage payments at face value, ask for a detailed and itemized list of the estimated closing costs. You want to be an active participant in your mortgage, not just pay what the bank tells you without knowing why.
You Can Bargain
We all know that bargaining is the best way to get a great deal on a new car, pair of shoes or whatever else you want to buy! Why not apply the same principle to finding a mortgage rate? Shop around different lenders and be open about the fact that you’re comparing around. Often if you ask the lender to lower their rate, you’ll be obliged. Don’t miss out on a great rate just because you failed to speak up.
Fixing your Mortgage Rate Protects You
Although fixed mortgage rates tend to be higher than variable rate mortgages, you will be protected in the case of future rising interest rates. It can often be in your benefit to pay a bit more at the outset to protect against paying more later on.