Mortgage Basics For New Borrowers

Mortgage Basics For New Borrowers

Mortgage Basics for New Borrowers
The dream of​ owning a​ home is​ something that is​ on​ just about everyone's lifetime goal list .​
It's one of​ the​ things that in​ some ways signals that we have made it​ in​ life and can bring great pride and a​ sense of​ accomplishment to​ many .​
For many who pursue that dream it​ can be a​ confusing undertaking if​ they are not prepared for the​ home buying experience .​
Without a​ doubt one of​ the​ most confusing and often misunderstood parts of​ the​ home buying experience is​ the​ mortgage process .​
Sadly,​ most of​ us do not have the​ money to​ just buy a​ home outright,​ so we turn to​ mortgage lenders to​ help us finance the​ home of​ our dreams.
One of​ the​ first things anyone who is​ interested in​ owning their own home should understand is​ the​ role credit plays in​ the​ mortgage process .​
you​ are getting ready to​ ask a​ lender to​ make a​ sizeable loan to​ you​ for an​ extended period of​ time - often upwards of​ 30 years .​
For them to​ take on​ this risk,​ they need to​ evaluate your creditworthiness - or​ your ability to​ pay the​ money back .​
They typically look at​ items such as​ your credit report which lists how you​ have dealt with other creditors in​ the​ past,​ your total household income and the​ price of​ the​ home you​ are willing to​ buy and where it​ is​ located .​
Based on​ this information they then decide on​ whether to​ extend you​ the​ loan and at​ how much interest .​

Interest is​ an​ important concept to​ understand because over the​ lifetime of​ the​ loan you​ can expect to​ pay back double the​ amount of​ the​ loan value based on​ the​ interest rate - that $150,​000 house has suddenly cost you​ $300,​000 .​
Your goal in​ the​ mortgage process is​ to​ get the​ absolute lowest interest rate you​ can.
You also need to​ know how much house you​ can afford .​
Most mortgage lenders typically look for you​ to​ spend no more than 30% of​ your monthly income on​ house payments .​
Of course,​ the​ longer the​ mortgage term and the​ lower your interest the​ more house you​ can afford to​ buy .​
It is​ important to​ buy something you​ can easily and comfortable afford - the​ last thing you​ want to​ do is​ find yourself in​ a​ crisis situation unable to​ pay your monthly mortgage payment!
Next,​ be sure you​ have saved up a​ sizeable cash reserve before jumping into the​ home buying process .​
you​ are going to​ have to​ pay things such as​ closing costs (which can be upwards of​ 5% or​ more) and pay as​ much of​ a​ down payment as​ you​ can to​ reduce your loan amount as​ much as​ possible .​
you​ then will want to​ have a​ little reserve left over to​ furnish your new home and take care of​ any needed repairs - remember,​ you​ own it​ now and it​ is​ up to​ you​ to​ repair it​ if​ something breaks!
If you​ are confused about the​ mortgage and home buying process,​ don't feel as​ if​ you​ are alone .​
Many people share the​ same concerns and fears as​ you​ do .​
Often times in​ your community there are local first time home buyer groups that meet with experts from the​ banking and real estate industry there to​ answer your questions .​
Ask your realtor about whether such a​ group exists and when the​ next meeting is​ .​
the​ home buying process doesn't have to​ be a​ terrifying experience,​ and if​ you​ come prepared you​ can win big by getting the​ best deal possible on​ your mortgage while getting the​ house of​ your dreams.

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