Getting the Best Bargain On Your First Mortgage

0
246
Mortgage

You earn a good salary, but a fair portion of it goes to paying rent. All that hard work and your landlord gets the benefit. Sooner or later, you want to purchase a home and develop equity in the property. Since you are not on the Fortune 500 list, and you can’t pay cash, you want to find a good home improvement loan. There are two major steps in this process:  knowledge and understanding.

Mortgage

Knowledge is Power

The first step is having a clear picture of your finances. How much do you earn, and what is your credit score? Review your credit report, and correct any errors before applying for home loans. Credit reporting agencies do make mistakes, and identity theft is a growing problem.  Be certain that the credit report is accurate because it is the most important factor in whether or not you get a loan.

Be honest as well as accurate.  If you have trouble paying the rent, it’s possible that you should not take out a mortgage.  In addition to the monthly payment, a homeowner will have to pay real estate taxes and expenses for maintaining the home. A Condo or Coop will charge maintenance fees.  A home will have taxes as well as utility charges, home insurance, upkeep and other expenditures.  Analyze your financial worth before approaching lenders.

The Next Step

You know your finances, and it is now time to learn something about loans and lenders.  It seems like a good idea to go to your bank and accept whatever they offer.  Some banks will offer better rates to clients, but others do not. You are incurring a debt that could last for twenty years or longer so it is essential that you get the best deal possible.  A loan agreement is a contract, and no business person will make a contract unless they know a great deal about the other party and the terms of the agreement.

Seek objective advice. You can start with a basic internet search.  Remember that a Google search is going to give you loan company websites.  They will give advice, but it will be seasoned with a sales pitch.  A loan officer is another name for salesperson. Yes, the law requires them to make a full disclosure but they are more concerned with getting you to purchase their product, whether the product is right or wrong for you.

Do Yourself a Favor

Ask your real estate broker for the name of a good mortgage company.  Your agent wants the commission, so will do the best to help. Ask friends for a referral.  Do not settle for the first available loan.  Compare agencies, terms and the agents. This will be a long-term relationship, so it is important that you feel comfortable with the loan executive. Go to several institutions before making a final decision—if you do not like the terms at one agency, you may find better terms at another.