Owning a home for the first time is an exciting experience. It makes you feel independent and takes arguably the most prominent purchases off your checklist. Unfortunately, many people rush into taking out a mortgage without analyzing its upsides and downsides and end up regretting their decision. You don’t want to make this mistake, especially considering it is not one you can rectify overnight. Check out these home loan tips for insights into mortgages and how they impact you as a first-time homebuyer:
It’s more than just getting the lowest rate
As a first-time homebuyer, you may be lulled into thinking you have won by finding the mortgage with the lowest rate. It’s only later that you will realize you were lured into a trap, and there is no way back. There is nothing wrong with shopping around for the best deals, but the real cost of a mortgage doesn’t always show up in the marketer’s description or the papers you are given to sign. Prepayment, portability, and penalties are some of the factors that dictate long-term suitability. Established mortgage brokers such as Axiom Mortgage Solutions can help you find home loans with the perfect combination of the properties that matter the most.
Include closing costs in your calculations
Failing to budget for closing costs is a newbie mistake that first-time homebuyers often fall victim to. These costs include home inspection, lawyer fees, and land transfer tax. Let nobody lie to you that your bank will cover them. These are your responsibilities and, together with HELOCs, will make up a significant percentage of your home’s value. For example, if you are eyeing a home valued at $500,000, around $20,000 will cover closing costs.
Don’t borrow just because you can
Having a $50,000 credit card limit doesn’t necessarily mean spending $50,000 with the card. Use the same logic when taking out a home loan. Your home buying decision should not be influenced by your mortgage qualification. Instead, base it on your repayment ability and your predetermined homeownership needs.
Explore other funding options
Mortgages may be the most popular and straightforward form of funding, but they have alternatives. These include personal loans and grants. Review and compare them with the mortgage products at your disposal before making your decision.
Avoid detrimental moves during loan an application
There are many things that can hurt your eligibility for a mortgage, especially if they are done in between the application process. Taking out another loan, making a big-ticket credit purchase, and quitting your job is some of the more obvious ones. Anything that negatively impacts your income or credit score will certainly have the same effect on your home loan eligibility.
Endnote
A home loan is a big decision to make. Before settling on a mortgage product, make sure you understand exactly what you are getting into on both the positive and negative aspects. Use the above tips, and if you have specific questions, check with a mortgage or finance expert.