Home Loan Lenders
If you are thinking of buying a house for the first time, you may not be familiar with the process of financing your purchase. Even if you’ve found a house that you like and can afford, there is still the matter of financing to consider.
When buying a home, you will need a down payment of at least 5% of the purchase price, or more likely 10%. It is sometimes possible to find home loan lenders who offer mortgages with no money down, but generally speaking, the interest rates are less favorable. Even if they seem good at first, it is possible that the loan is an adjustable interest rate loan, which means that your interest rate (and therefore your monthly payment) will skyrocket down the road. It is wise to plan ahead when thinking of buying a home, and save up enough of a down payment so that you can get a 30-year fixed rate loan.
Research home prices versus rental prices in your area before you make the decision to purchase. When you are calculating the monthly mortgage payment that you can afford (it should be no more than about a fifth or your gross salary) don’t forget to factor in hidden costs like homeowner’s insurance and property taxes. If you are planning to move within the next five years, it might be smarter to rent instead; it’s best to buy a house when you’re in a situation where you’ll be in it for a while and able to build up some equity. However, if home prices in your area are on a strong upward trajectory (and the market’s not over-inflated) buying a home can be a good investment. Before you talk to home loan lenders, talk to other homeowners in your area and see what they think.
Home loan lenders vary widely; you should make sure that you choose a lender who offers competitive interest rates, and make sure that you fully understand any paperwork you sign. It might be a good idea to get a referral from a friend or relative in the area who can point you in the direction of a good lender. You might also consider checking out some books from the library about purchasing your first home; these will have checklists of factors to consider.
Try to get the best price possible when purchasing a home. A home inspection may not reveal major problems, but even small repairs can add up; use this information as leverage to bargain with the seller. The lower your purchase price is, the less your monthly mortgage payments will be. In any case, be sure that the monthly mortgage payment (together with property taxes and homeowners insurance) is something that you can afford, and that you research home loan lenders carefully to find the right one. After you get into a routine with your monthly payments, try to save some extra money. It is advised that you should have the equivalent of at least six months worth of expenses in your savings account so that should an emergency arise, you will have enough money to get back on your feet.