Families who are getting ready to buy their first home are sure to be bombarded with advice on how to go about purchasing it. With so much advice, it may be hard to know exactly how to get started with financing a first home. Having a step-by-step guide can help first-time home buyers through this process.
Types of Mortgages
It is essential for people who are ready to buy a home to have a basic understanding of the different types of mortgages. Depending on a family’s financial circumstances, there are several ways to go about financing a new home. Different types of mortgages have different requirements, including how much home buyers have to put towards a down-payment, what the minimum credit score must be, and how many years the home can be financed for. Learning about the various types of mortgages is an important first step in the home buying process.
Getting pre-approved for a mortgage
New buyers will make the process of buying a home much simpler if they obtain a pre-approved mortgage loan. This takes away the headache of finding a home, only to be denied for financing. Once buyers go through this process, they have won half the battle. Any realtor or seller will be ready and willing to go to the next step of the home buying process with a buyer who has taken the time to get pre-approved for a mortgage loan. However it is important to remember getting pre-approved does not guarantee that you will be given a mortgage. It is just the initial step in the overall approval process. Buyers can get pre-approved and ultimately get denied financing.
Comparing mortgages online
There are many helpful tools online that will allow potential home buyers to compare one mortgage loan offer against another. When using online mortgage comparison sites, users will have the advantages of being able to compare multiple lenders at one time. What sounded and looked like a great deal on paper, may not stack up so well when compared to offers available through other mortgage lenders.
Learn about mortgage amortization
For new home buyers, terms like mortgage amortization may be confusing. Knowing about how mortgage amortization works will help home owners understand how long it is going to take them to pay off their home mortgage balance. This information will help make it clearer what type of loan will be in the buyer’s best interest. It also helps to be familiar with the term when talking with a mortgage loan officer. If he sees that the buyer understands the terminology, he will be more likely to offer the best mortgage loan offer possible.
Will you need Mortgage Default Insurance?
The need for Mortgage Default Insurance is something that is misunderstood by many people buying a home for the first time. Whether or not the buyer needs Mortgage Default Insurance will depend on the personal financial circumstances and the type of mortgage loan. The loan officer will advise the buyer before closing if Mortgage Default Insurance is required. There are advantages and disadvantages to having Mortgage Default Insurance, and also ways to avoid it altogether.
Understanding mortgage points and closing costs
Another consideration for people who are preparing to purchase their first home is the additional costs that can be added by mortgage points and the various types of closing costs. It is in the buyer’s best interest to understand each aspect of mortgage points and closing points thoroughly before signing any loan closing paperwork.
Using a mortgage calculator
It takes a great deal of financial planning to prepare for the purchase of a home. A mortgage calculator can help buyers determine the affordability of a mortgage and whether or not they will have difficulty in keeping up with the monthly mortgage notes. It is a step in the home buying process that allows people buying a home to know how much they can afford to borrow.
Choosing a lender
Once buyers have gained a good understanding of the mortgage basics and have determined how much money they will be borrowing, there comes one of the most difficult decisions, choosing the best mortgage lender for their particular circumstances. There are many different options available, including mortgage lenders for bad credit, online mortgages, and low-deposit mortgage options. Each type of lender has its own unique advantages. It will take some time to compare each type of lender and choose the one that best meets the buyer’s financial circumstances.
Buying your first home is a big step—and we want to help make your first big purchase a success. Oakville Real Estate Law firm can advise you in the successful execution of your real estate contract. All phases of the transaction are handled on site. Contact us to schedule to schedule a consultation.