Buying a flat or a house is a very important decision. Anyone who has decided to take a mortgage and purchase the place to live needs to take a lot of factors into consideration, before choosing the loan offer. What to take into account when taking the mortgage? Below you’ll find a few tips which will help you during the decision-making process.
First, it is worth to arrange a visit with a loan advisor. Such appointments are usually free of charge and they are very helpful. When we give the advisor all required details for example the amount of our savings, the down payment we can provide, our earnings, already taken loans, number of children etc., he or she will calculate our credit score. Owing to this calculation, we will be able to get to know what kind of property we can afford to purchase.
The advisor will also explain to us all the complicated details about the mortgage loan itself, for instance how much we will have to pay back and what the monthly installments will be. Of course we can also ask directly in the bank, but there we will only hear about the offer of this particular institution, whereas the advisor has an offer of the most of the banks, credit unions and institutions, which can save us a lot of time since we do not have to visit a few lending entitites to have an idea of what different institutions offer.
After we have learned what property we are able to afford and we have found a perfect flat or house, it is the time to choose the bank, savings institutions or credit union. We have to bear in mind that once we take a mortgage loan, we will be connected with a particular entity for many years, so it is very important to choose the one that meets our needs. Therefore, it is advisable to compare the offers of at least three banks and see which gives the most preferential rates.
The interest is the biggest expense related to the mortgage, thus we should check what amounts different banks charge for granting the loan. The bank also require different percentage of down payment. We can also decide to take a government-backed loan, the aim of which is to make the home buying process more affordable. Loans that are insured for instance by Federal Housing Administration, require approximately 3% of down payment only.
When we take a conventional loan, we will usually need to have about 10-20% of down payment, so the difference is very big. We also need to decide whether we prefer to pay fixed or adjustable installments. Fixed rates are better for people who are planning to spend most of their lives in the property and have quite steady and regular income. Adjustable rate can be a good choice in case of people who often have some extras and there is a chance to pay off the loan faster or who want to live only temporarily in the property and are thinking of selling it after a few years. In both cases, it is better to start with lower rates which will increase with time.
There are quite many factors to consider, but the purchase of the property is a decision that affects the whole life so it has to be preceded by a careful analysis.