Mortgage makes for one of the biggest financial decisions one can ever make. Applying for mortgage cannot really be equated with buying a car or buying expensive commodities for your home. A home makes for one of the biggest assets that one invests in his lifetime. And, buying a home is almost synonymous with taking a loan – since most of us don’t have the ready cash to buy homes. Finding the right mortgage is not only about getting the best rates. If you’re only looking for the best mortgage rates in the market then you will end up being disappointed. It is also about finding the right partner who can guide you through this complex transaction. Please remember that your lender is not the one who provides you the loan and charges rate of interest on it. A lending institution can also be regarded as a constant guide suggesting you regarding the loan schemes that will suit you. Given below is a list of few factors that you should consider before taking a mortgage.
Fixed or Variable Rates of Interest
Borrowers have to decide whether they would settle for fixed or variable rates of interest on their loans. If they choose to settle for fixed rates then the rates on their loan will not change throughout the entire tenure unless they decide to refinance the same. The variable rates on the other hand, vary with the varying market rates. They will decrease if the market rates go down and go up if the market rates experience a hike. It is your fiscal situation which should ideally govern your decision in this regard. Do you think you have enough savings to afford a possible future hike? Do you think you should settle for variable loans since the market rates will go down, according to your predictions? Do make sure that your questions are duly answered before you finalize loan terms.
Make sure you’re zeroing in on the right lender
As already noted above, your lender is your guide. The lending institution should make it a point to inform as much as it can through its website since borrowers are most likely to check the website first. So, to start off with, a lender should ideally have an informative website.
Please remember that the cost of the loan is not only about the rates of interest. There are various other attributes involved in this regard:
- Application Fee
- Appraisal Fee (which estimates the value of your home)
- Points (Make sure if you have points then your rates of interest are reduced)
- Documentation fees
- Processing fee
- Escrow Fee
- Prepayment Penalty
- Credit evaluation
- Title Insurance
- Title Search
Considering all the aforementioned factors will help you understand what the total cost of your loan should be.