Getting ready to buy your first home is an exciting process, but you shouldn't be so focused on the house itself that you neglect to put enough time into securing your mortgage. For a first-time buyer, the process of obtaining a mortgage might seem a little daunting — but it doesn't have to be. It's generally a good idea to get pre-approved for a mortgage before you actually start looking seriously at buying a house. Doing so in advance gives you enough time to get the right pre-approval to suit your budget and needs. Here are some things to know for the first-time buyer.
You Can Approach Different Lenders
It's sensible to approach your own bank when you want to get pre-approved for a mortgage, and it's arguably easier to secure this loan through the banking institute that you already use and are familiar with. However, it's important to know that you can approach different lenders. Just like you want to shop around a bit when you're planning to buy a car, it's a good idea to shop around with your mortgage pre-approval. Talk to a couple banks or credit institutes, and don't shy away from approaching a mortgage broker, either. In many cases, your real estate agent can refer the latter to you.
Don't Automatically Buy Based On Your Pre-Approval Rate
When you sit down with a finance professional to get pre-approved for a mortgage, you'll discuss several factors such as what you earn and what you owe. The mortgage professional will take these factors into account and give you an amount up to which you're pre-approved. For example, you might be pre-approved to buy a house for $325,000. This amount shouldn't automatically compel you to look for a house at this price. Just because you're pre-approved for a certain amount doesn't mean that you can't buy well below it. Doing so will keep your mortgage payments manageable.
Try To Raise As Much As Possible For The Down Payment
The mortgage that you'll pay depends on how much you put down at the time of purchase. When you speak to your home mortgage professional, he or she will want to know how much you plan on paying as a down payment. A small down payment might seem tempting, but this will increase your mortgage payments. The more you're able to put down at the time of purchase, the less you'll owe on your mortgage.
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.