You have found your dream home and you want to make it yours so it is time that you think about mortgage. What should you do before you jump right in with your home purchase and mortgage application? Well, when you purchase a house, it is a very big investment. It could probably be your biggest investment yet. So, you may need to be thorough and careful when you go seeking for a home purchase mortgage. After all, you will probably be stuck with the mortgage for a very long time.

It is crucial that you check out all the mortgage products being offered by financial institutions and banks before making your decision. You may need to seek a product that suit your needs and get all your mortgage questions answered. It probably is especially important that you get one with a very low interest rate as even a tiny difference in interest rates could mean a larger amount of monthly payment you may have to make.

To make it easier for you to make a decision on getting the right home loan, here are some tips:

1. Do some budgeting – Before you jump right in to make a bid for your dream home, check your financial situation. How much do you have in your bank? How much is available to you? How much are you able to spend for your new home? Most importantly, do you have enough to cover at least six months of loan repayments and other expenses on top of using part of as downpayment for the property? You may need to have savings on hand because you never know what could happen a few months down the road. You could suddenly be incapable of servicing the loan (due to illness, job loss or reduction in income) and this could probably result in you losing your home when your creditor decide to foreclose on your property.

2. Decide how much you can afford to pay each month – Whatever you do, it is best that you do not let the lender decide how much loan you can afford to take up. While they may give you assurances that you will be able to afford the monthly payment, they may be wrong. Nobody but you know how much you can or cannot afford.

3. Your downpayment amount – You may need to consider how much you are able to put in for the downpayment of your home. The higher the downpayment, the lesser you may need to borrow.

4. Your credit rating – this is by far one of the most important factors when a financier consider your loan application. You may find out about your credit rating by getting copies of your credit rating from either one of the three main Credit Reporting Bureaus, Experian, Equifax and TransUnion. Do remember that your credit rating is probably very important and if there is an error in your credit report, you may end up with a bad credit score, higher interest rate and higher fees for the loan.

5. The type of mortgage – you may need to know about the many different loan programs available. Do not be ashamed to ask questions and find out more details about each program. Choose programs that suit your budget and your needs.

Finally, after getting your mortgage, do remember that if you need a large sum of money for other purposes or if you are unhappy with your mortgage, you may always check out mortgage refinancing. By refinancing, you could possibly get a lower interest rate on top of getting a lump sum of money to cover unexpected expenditures like medical bills.

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Category: Finances
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