It has been said that buying a home is the largest purchase you can make in your life and for many people, that is true. Finding the home is just a small part of the process and understanding the financial part of the process can be tough. With interest rates changing all the time and other costs added to your home's mortgage, it is important that you are clear about what you are spending and why.
Prequalifying For A Mortgage Amount
When you start to consider buying a home, many real estate agents will start the conversation with, "Are you pre-qualified yet?". There are a lot of common misconceptions with this because prequalified is not approved. The pre-qualifying process is a way for the bank to determine the amount of money they would potentially give you based on your income and expenses. It is not a guarantee of a loan and while it is a good place to start, there is a lot of things to do after that.
The Changing Interest Rates
When you are applying for a mortgage, you have to remember that interest rates can make a huge difference in the final cost of your home. If you loan is based on a flexible rate, you may start low and end up with a high-interest rate that can really change the monthly payment you are making. In some cases, that change in rate can be too much for the homeowner to afford. If you can lock in a fixed mortgage rate you will be much better off over the term of the loan. Talk to the bank about what your options are and do not sign the loan documents if it is not what you discussed.
First Time Buyers Programs
A lot of banks and finance companies are offering first-time buyers programs for first time home buyers but that does not mean that you would not qualify for a traditional mortgage. If you are considering a first-time buyer program, take the time to really dig into it so there are no surprises. In some cases, the interest rate might be higher or based on a flexible rate. While these programs are designed to help you afford your first home, be sure to understand the terms before you go down that road.
Be sure to take the time to discuss closing costs and additional fees with your real estate agent before you are sitting at the closing. It is important that you go into the closing with everything in place. There can be additional costs that are not rolled into your mortgage like the down payment and those aforementioned closing costs. In some cases, you can get negotiate the closing costs in so that the seller pays all or part of them and makes the closing easier for you. Don't assume anything about these or any additional fees. Ask the questions so you go into the closing clear and prepared.Share