If you are a first-time homebuyer, you may have a lot of queries regarding the mortgage process. It won’t be wrong to say that many homebuyers spend a lot of time on choosing the right property but they often think that all the mortgage deals available in the market are the same. The truth is that as a homebuyer, you need to shop around to get the best mortgage deal that fits your particular financial needs.
It is better to take your time to find the right mortgage as it has the potential to save you thousands of dollars over the life of your mortgage which is often 30 years. Here are some helpful mortgage tips to help you find the right deal for you.
Many first-time homebuyers often get confused by the sheer number of mortgage offers available on the market today. This is the reason experts recommend working with a mortgage broker. There are a number of advantages of working with a mortgage broker. One of the biggest advantages is that they have access to a number of deals from a number of different financial institutions which means that they may be able to get you the right deal for your needs.
These qualified professionals will explain to you everything you need to know about the mortgage process. Keep in mind that you will be paying off this mortgage over a period of 30 years and therefore, it is important that you shop around to find the best deal. The interest rates as well as associated fees are negotiable and if you take your time, you will be able to find a deal that will save you a lot of money over the term of the mortgage.
There are two types of mortgage, namely fixed rate mortgage and adjustable-rate mortgage. While it is true that fixed rate mortgage interest rates tend to be higher than the interest rates on adjustable-rate mortgages but you need to consider the pros and cons of both the products to find the best fit for your needs. Adjustable-rate mortgage has a lower interest rate but you also need to take into account the prepayment penalties as well as other features. For instance, an adjustable-rate mortgage is the right choice for a first-time homebuyer who plans to move on in a short period of time as it can save them a lot of money.
Many homebuyers are afraid of asking too many questions. If you do not understand anything, you should never be afraid of asking your local mortgage broker or the bank representative about it. It is a huge financial commitment and you may have to pay thousands of dollars extra in case you do not take time to study the deal and have clarity on everything in the mortgage contract.
Keep in mind that mortgage brokers and others often use terms that may not be obvious to you and you should always ask them if you are not clear on anything. You are the best judge for your needs and you need to understand a particular mortgage product to make sure that it suits your needs.
Do not make the mistake of being overoptimistic about your future. As far as the amount of mortgage is concerned, it is usually decided by the lenders on the basis of your income and expenditure. Therefore, you need to be honest about your financial situation right from the start. You should be able to afford the monthly instalments even if interest rates increase slightly in the future.
There is no benefit of applying for a higher mortgage that you can’t afford. It is not only illegal to lie about your income on the application but you may also get in financial difficulty if you are unable to afford the monthly payments over the term of the mortgage.
It has been observed that many homeowners make the mistake of not carefully reading the fine print of their contract before signing documents. Do not forget that signing up for a mortgage is not like you are opening a new free e-mail account or a social network account where you can just tick the box that you have read and understood the terms and condition. You need to read and understand everything mentioned in the mortgage documents to make sure that it is as per your expectations.
There is huge competition in the lenders and if you have a good credit score and a great job, you are likely to get great deals from various lenders. So, you should shop around and negotiate fees and interest rates.
Another important thing you need to keep in mind is that the good faith estimates given by the lenders are just estimates and not the final price. Many people wonder about the price changes at the closing table. Keep in mind that interest rates keep changing and rate on your closing date may be different from the good faith estimate provided by the lender.
There are also some unscrupulous lenders who will increase the rate at the last moment. You should never sign the paperwork in case you are not comfortable with the pricing offered by the lender. Feel free to walk away from the table in case you are not happy with the deal and ask them to give you a better deal.