Buying a home is definitely in everyone’s dreams. It is our biggest investment. If buying a home is in your future, good budgeting includes saving to pay for as much of it as possible. When you’ve set aside a significant amount, your next step may be to get a home loan to cover the rest.
A lot of banks and financing companies offer home loans. It’s important to do some homework so you’ll get the right loan from the right lender. There are basic rules and ways to follow when you’re looking for loans and lenders.
Know your niche. Borrowers need to know which market niche they fall into. When you pick up a newspaper and see a price quote on home loans, the prices you see there are for generic borrower with a whole range of features, which are all favorable from a lender’s point of view.
Those advertised prices make assumptions about you, the customer, which includes the following:
You’ve got great credit and enough income and assets to meet the lender’s requirements.
You can fully document your income and assets. This is a tough one especially if you’re self-employed.
If you don’t meet those requirements, you’re out of luck. Those great advertised rates are not for your but for Mr. Generic Consumer.
Before you set out in search of a home loan, be sure you know how you deviate from that generic norm and in which borrowing niche you fit. Begin the process with realistic expectations. Assess yourself first.
Decide on a home loan. Smart home loan shoppers realize that lenders with the best deal on one type of loan may not have the best deal on another. Do some research. Do you want a fixed-rate or adjustable-rate? Do you want a 30-year or 15-year term loan? How about down payments, do you want a large down payment or no down payment? Figure out which type of home loans suits you, and stick with it. Be sure to regularly pay scheduled payments to avoid foreclosure.
Save big with a shorter mortgage. If possible, choose a home loan with a shorter mortgage that offers the lowest interest. Your monthly payments may be higher, but you’ll pay a lot less interest. One thing is for certain, when you choose a shorter term, you’ll save a lot of money.
Remember also to pay off your home loans early. If you had a cash windfall from say bonuses or prices you’ve won, and you don’t have necessary expenses on the line up, use it to pay off your home loans early. In this way, you’ll save a lot of money in paying the interest. You’re sure to find better ways to spend your money than paying on mortgage interest.
Choose your lender. The mistake that gets people into trouble is not selecting a loan provider, but allowing the loan provider to select them. They are solicited.
The problem with letting yourself be solicited is that solicitous lenders are anxious to sell you a loan that will be profitable to them. If you do the choosing, you’re in the driver’s seat. Victims of predators are almost always solicited.
Always choose the lender to your advantage. When choosing between in-house financing and a bank mortgage, look for the best deal that will suit your budget. Aside from the interest rate, the term of the home loan, and the down payment required as mentioned above, always ask the lender for some after service. What happens once you fully paid the loan? Will they handle the transfer of the title to your name? Ask also if they will pay the transfer fees and all other fees associated with the transfer of the title. Use it as much as you could to your advantage.
Buying a home should not be a burden to our finances. Be wise in getting your home loans.