Most people who are looking to buy a house will simply start shopping, but there are several things you need to think about or do before you start looking. The following are among the most important.
Think about a 15-year mortgage
Although most people take out a 30-year mortgage, there are certain advantages to having a 15-year mortgage, so you should take the time to consider them before you assume that a traditional 30-year mortgage will be best for you. Naturally, you will pay off your house in half the time with a 15-year mortgage, but the greatest advantage is that you will build up equity in your home more quickly.
If there is a downturn in the economy, you are less likely to owe more than the house is worth. The monthly payments on a 15-year mortgage are usually higher than with a 30-year mortgage, but some of this can be reduced by making a larger down payment. It may be worth delaying a home purchase until you have a larger down payment.
Check your credit report
Don't assume that you know how good your credit is. You need to have a look at your credit report. Keep in mind that there are three different credit agencies that lenders report to, so you need to get your report from all three of them. It is possible that you can have a bad mark on one report but not the other two, and the lender that you are applying for a loan from is using that one credit agency.
Your credit score will have strong influence on the interest rate of the mortgage, so, if later, when you apply for a loan and you find the interest rate unacceptable, you can delay your home purchase while you attempt to improve your credit score.
Get pre-approved for a loan
The last thing you need to do before shopping for a home is to get pre-approved for a loan. By doing this, you will know exactly how expensive of a house you qualify for, and this will keep you from buying a house that is more than you can afford. In addition, if you do not qualify for a mortgage that will enable you to purchase the house you desire, you can wait until you save up a larger down payment or work towards a better credit rating to reduce your interest rate.
Keep the above things in mind while you consider purchasing a home. But most importantly, understand that mortgage considerations come before house hunting. Talk to a lender like FCN Bank to learn more.
When I started my own company, I knew that I needed a little business capital and fast. In an effort to raise money, I worked with various lenders to discuss loans, financing, and special terms. Unfortunately, I quickly discovered that not every loan was created equally. Some loans had almost predatory terms like high interest rates and penalties, while others were completely fair. Fortunately, a business consultant of mine taught me about loans and financing, so that I could make better choices in the future. The information on this blog saved my business, and I know that it can help yours too.