Your First Mortgage
If you're new to the world of home buying, chances are you've never applied for a mortgage before. Obtaining a mortgage can be a lengthy and complicated process or it can be relatively straightforward. The type of experience you have with the mortgage process is dependent on how much research you've done beforehand and the type of mortgage and provider you choose.
One of the first factors to research is the type of mortgage you want. Generally mortgages come in two varieties: fixed and adjustable. A fixed mortgage means that you will make repayments for a predetermined term, for example, 20 years. The interest rate is also fixed. This means that each month you will be paying the same amount as neither the interest rate or the premium will change for the full term of the mortgage.
However, an adjustable mortgage allows you to pay premiums according to a fluctuating interest rate. Economic conditions influencing the interest rate will accordingly affect your monthly payment. There are several advantages and disadvantages associated with both types of mortgage so you should ensure you're familiar with them all before you make a decision.
Another important factor in the process is choosing a mortgage provider. First time home buyers used to visit the bank to negotiate a mortgage. However, in recent years a range of financial institutions have joined the mortgage business. You may choose to go with your bank but you could also sign up with a private insurance/investment firm or a state funded scheme. Shop around to find out which providers offer benefits to first home buyers and above all, find an experienced agent that you can trust.
Finally, make sure you do everything possible to qualify for the best mortgage possible. Obtain a copy of your credit report and clear up any outstanding debts. Becoming more organized will save you time and hassle applying for a mortgage so start gathering documentation such as copies of pay stubs and bank statements. You should also ensure you have enough cash set aside for closing costs before you apply. These range from two to five percent of the mortgage and cannot be borrowed from your provider. Make sure you have savings to cover the closing costs on your first home.
For more infomation on bying a home choose from the list below. |
|
|
|
|
|
|
Banking - Business Finances - Economics - Insurance - Investing
Major Purchases - Personal Finances - Stock Market - Taxes
|
