Taking a mortgage is one of the most important financial steps in anyone’s life. And regardless of whether you are doing this as an investment or if you actually want to live in the house you finance with your mortgage, you will definitely want to be really well informed before you seal the deal.
What are some of the most important things you need to know before taking a mortgage? Read here and find out more.
Not all loans are created alike
…and you really need to know the differences between the different types of mortgages available out there. Otherwise, you might end up with a very long-term loan that doesn’t satisfy your needs and expectations – and that’s the last thing you want to cling on to for the next decades or so.
You do need good credit score
Depending on each lender’s policy, you may be able to land on a mortgage even if your credit score is a bit lower than the average. However, keep in mind that most of the times, this also means that you will have to pay higher interest for your loan or that your down payment will have to be much more substantial than if you had a better credit score. Furthermore, if you do have bad credit mortgage brokers can help you to secure a mortgage even if your credit score isn’t perfect. If you are not yet willing to settle for these options, build your credit score a bit and re-apply when you can land a great mortgage offer.
Think twice before getting an interest-only mortgage
It may seem like a much better deal, but in most of the cases an interest-only mortgage will only make you pay a lot of money and not build equity on your purchase. There are some cases when getting an interest-only mortgage is a good idea, though (such as when you are taking this loan as a short-term bridge or even as a construction loan).
Paying higher fees for the mortgage application is not always a bad idea
It may seem like a hole in your budget short term, but the truth is that higher fees may also mean a better quality of the services. Most of the times, mortgage institutions that practice higher fees have a very strong policy when it comes to supporting their customers in really making the best decision for their budgets and for their financial capabilities. In other words, your questions will most likely be answered more promptly and more accurately when the service offered by the mortgage company is of a higher standard.
Think “thrice” before signing anything
Read the contract and the fine print, make sure you are very well-informed and do your math not only for the next couple of years, but for the long run as well. If you are like most people, this is one of the largest investments you will ever make – so you really need to think things through, shop around and analyse each and every advantage and disadvantage offered by the options you have at hand. This is the only way to make the best choice for your finances!