The excitement to own your dream house can put you in the position where you become very impulsive in dealing with the house broker and mortgage company. This can result to bigger problems later on as you start paying your monthly mortgage. The thing is, the process of buying a house involves gathering correct information and careful assessment on all the aspects including capacity to pay the mortgage, the type of house to choose, the kind of term you need, the amount of mortgage payment you can afford, the broker and lending company to choose, etc. Take a look of the top 10 things you should know about house mortgage.
1. The less you owe; the less interest you pay. Getting off on the right foot will maximize your savings. Start right by not settling for the minimum down payment that the house seller requires. Save for your down payment early. The higher you pay for your down payment, the lesser you owe. And the less you owe, you less interest you pay. Also, paying your mortgage sooner than your scheduled date is very effective too.
2. Getting approved for a mortgage doesn’t mean you have already owned a house. Whether you take the 15-year or 30-year mortgage, the case still remains the same: your equity does not make you the owner of the house yet, at least during the first few years or even halfway on your mortgage payment.
3. ARMs or the Adjustable rate mortgage come in different varieties. ARMs are often understood as mortgage with interest that goes up and down every year. Take note of this: there are several types of ARMs that you need to know. There is the 1 year ARM with 2/6 caps. Meaning, the annual percentage rate is fixed for the first year and may change once a year afterwards. The 3 to 1 ARM has a fixed rate for the first 3 years of the term and may change at least once a year on the succeeding years. The 5 to 1, 7 to 1, and 10 to 1 have fixed APR during the first five, first seven, and first 10 years respectively and may change once a year after the fixed-rate expires.
4. Asking your brokers to lower down the interest rate will give you significant savings. It may sound elementary but only few realize it during the processing stage of the mortgage. Be your own advocate and ask for better deal. Do not assume that the rate posted on the listing is final.
5. You can get savings by paying your points. When you pay points, you lower the interest rate down. And by lowering your interest, you will pay less. However, this may only be effective if you are planning to stay at you house or sticking at your mortgage for a long time. But if you don’t, skipping the points is a better idea.
6. Examining the cost of your mortgage carefully will give you small information on how to save. Asking for a detailed list or itemized is of the estimate cost of mortgage will tell you clearly how much you will for your loan from the beginning of the loan to the closing cost.
7. Your broker’s fee is negotiable. Brokers compete against other brokers and the last thing they want to happen is for a sure buyer to slip out of their hands. So if you are buying a house, do not forget to negotiate the price with your broker. I tell you, if you are committed in buying a house through a broker while playing “hard to get”, he or she will certainly give you discounts if you will just ask.
8. Job stability is very important. House mortgage is a long term loan and thus, must be planned carefully. Make sure that you have a good source of income during the entire period of the loan. Otherwise, there is a good tendency that your house will be foreclosed and you on the verge of bankruptcy.
9. Credit rating affects your mortgage interest rate. Unless you are applying for a bad credit house mortgage (which is a bad idea), make sure that you improve your credit rating first. This will give you advantage of getter a better deal with your mortgage company. Having a good or excellent credit score makes you a less-risk borrower and thus, the company will give you lower interest rate.
10. When in doubt, seek professional help. It is okay to admit that you do not know what to do. Take time to seek professional help so that you will be guided as to what actions you should take to owning a house.
For more information on mortgage and home financing please go to:
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