Home Loan Calculator
With interest rates having dropped significantly, many people who have never owned a home are looking into purchasing a place they will call home. Such is a very huge decision to make and there is a lot to know before you get out and start shopping for that home you have always dreamed of. Being equipped with what to expect will make the process less gruesome and easy. If you are looking into applying for a home loan, here are the basic most important things that you should factor in before applying for the mortgage.
Learn the jargon – be advised that the home loan market has a variety of mortgage plans in place, with each having its distinctive benefits. As such, you should familiarize yourself with the basics such as adjustable rate, fixed mortgage rate, VA mortgage, FHA mortgage etc. You also have to understand exactly how the interest rates your mortgage type will attract will impact on your monthly paycheck. Knowing about PMI and points will also be an added bonus on your side.
Choose a lender wisely – make sure you work only with a trusted, reputable and reliable lender.
Get to know how much you can afford – you should utilize a mortgage calculator to help you figure out the amount that you can afford comfortably, insurance and taxes inclusive. If you can also afford it, you should make a high down payment because doing so will reduce your mortgage payments significantly.
Avoid opening accounts – you shouldn’t apply for any credit cards or open a store accounts or such like lines of credit. This is because it will impact on your credit report and negatively affect the type of loan and interest rate you will be allocated.
Avoid closing accounts – by the same token, ensure all your active accounts, including those with a $0 balance, remain active and open. This is because existing accounts help in maintaining a credit history. Needless to mention, with a long credit history of good payment record, you will get a very good mortgage package.
Don’t change jobs or quit – a steady employment history is very important when it comes to mortgages. Preferably, you should have been employed at the same workplace for at least 2 years. This doesn’t mean that if you have stayed for less than a year you cannot qualify, no, you will still qualify for the home loan but you must remain with the same employer for as long as possible.
Avoid late payments of your bills – last but not least, you should ensure all your bills are paid on time to avoid getting a higher rate of interest of being denied a loan altogether. Remember, late payments impacts negatively on your credit score.
