People buy and sell homes every day, so you might think applying for your first mortgage is easy. Unfortunately it’s a little more involved than buying a new bicycle, and can be quite a protracted process. You can reduce the stress associated with obtaining your first mortgage – the following suggestions will help you know what to expect in advance, and help you find the right mortgage for your situation
Home Mortgage tip #1 Shop for interest rates
Don’t take the first interest rate you come across – shop around and discover the market average rate. Even easier than making phone calls is shopping online, which has the added benefit of being the place you are more likely to find discount interest rates. The loan and interest rate you choose governs your repayments, so the lower the interest rate you can find, the better.
Home Mortgage Tip #2 Choosing Fixed or Variable Interest Rate loans
Home loans have changed, and are no longer just a matter of paying a fixed amount over a set number of years. Fixed interest mortgages are still available, but there are other choices like variable interest rate mortgages. This choice allows you to choose the loan that best fits you situation, both now, and in the future. Researching the difference between fixed or variable rate home loans will help you decide what will work best for you.
Home Mortgage Tip #3 Down payment requirements
Many first home buyers are unaware of down payment requirements, which are usually between 10 and 20% of the amount financed. With a good credit history you may even be able to negotiate a lower deposit and a lower interest rate as you present as a lower risk to the lender. Again, this depends on the home mortgage lender, and it pays to shop around