Hello World! Welcome Friends! If you’re considering taking out a mortgage, then you most likely already know how big of a responsibility it is to own your own house. But before you jump into the purchase, it’s important that you know everything there is to know about taking out a mortgage. If you’re a first time home buyer, you may be thinking that all you need is some paystubs, good credit, and some saved up money. Prospective homeowners eagerly watch for fluctuations in mortgage rates indianapolis, hoping to secure the best possible deal on their loans.
However, there is much more to owning a home than these 3 simple things. Knowing all of your mortgage facts, including the numerous baffling mortgage terms, before even visiting a lender is the best way to ensure that you get the loan you need and make all of the best decisions possible. Are you ready to become a homeowner with ease?
Continue reading below for our list of 5 mortgage facts you need to know about before you get one!
1. You’ll Need a Down Payment
At this stage in your life, you most likely have had several loans for a couple of different things. Perhaps you took out a loan for your car, to pay for college, or a personal loan to pay for something else. When taking out different kinds of loans, it’s always a great idea to have some type of down payment.
However, when taking out a loan on a house, it’s essential. Did you know that when purchasing a home you’ll need a down payment of at least 3%? It’s true.
And if you really want to be ahead of the game, consider saving up at least 20% of the loan as a down payment.
2. You’ll Need the Right Budget
You’ll also need to have the right budget set into place. Create and plan a budget for you to save up enough money for the down payment and for any extra expenses that might come up. As a homeowner, you’re 100% responsible for anything that needs fixing in your home.
It’s a good tip to have a savings account set aside for emergency money when something does go wrong. For example, when your air conditioning breaks down, you’ll need your savings money to fix it quickly. Figure out how much money you can set aside each month and start doing it now!
The sooner you begin saving, the sooner you’ll reach your goals.
3. You’ll Need Good Credit
If your credit score isn’t up to par, then you’re going to want to fix it before applying for a mortgage loan. For every point that your score is under 800, you’ll pay more in interest. Now we know that the difference between an interest rate of 2.8 and 3.8 doesn’t seem like something to worry about, but it is.
This small difference can mean saving thousands on interest by the time you’re done paying off your mortgage. Be sure to pull your credit report before applying for the loan. Your lender will want to know about it, so you’ll need to have the answers.
Although you can purchase a house with a low credit score, this isn’t going to help you get the most competitive mortgage rates, which is what you want. If need be, begin paying off all debt before buying your new home.
4. Know Your Price Range and Location
Your price range shouldn’t exceed more than 30% of your income. Although the price of a house might seem ideal, you have to take into consideration the fees, local tax rates, and price of insurance as well. This means that your price range might not be as high as you once thought it was.
Now, once you factor all of the extra expenses into your price range, it’s time to consider some other important factors such as the location. Create an entire checklist of what you need from your new home. This includes the number of bedrooms, bathrooms, square footage, and more.
Then, do research on the neighborhood. A house that seems to perfect to be true most likely is. If you find a house with everything you’re looking for at a super cheap price, then you might want to do some research on the neighborhood.
It won’t be worth it to buy the home, but put yourself and your family in a bad location.
5. Consider Mortgage Protection Insurance
Speaking of extra expenses to take into consideration, don’t forget about mortgage protection insurance. This type of insurance is designed to help you pay off your loan if you were to pass away before paying it off yourself. Your insurance policy runs the same length as your mortgage loan payments.
The amount that you’ll need to pay each month depends on a couple of different factors including your health, age, and if you’re a smoker or not. Without this insurance, any heirs that you have such as children will be forced to finish paying off your mortgage loan. This is why it’s such an important factor to consider when applying for a new mortgage on a home.
Know These 5 Mortgage Facts Before Applying!
Before applying for your new mortgage, be sure that you understand all of these mortgage facts listed above. Doing so ensures that your application process is as simple and stress-free as possible. Have a good down payment ready to save you on interest and plan a budget to ensure you can make the payments.
Improve your credit score to get a better interest rate, know your price range and location to ensure you get the best deal, and always consider mortgage protection insurance to save your heirs from your debt.
We hope you found this post interesting and helpful. If so, be sure to keep checking back with us regularly for more!
Click the links below for any posts you may have missed:
First Time Home Buyer Checklist
Caring for your Stainless Steel Sink
Ideas for Hanging Air Plants Indoors
How to Choose the Right HVAC Contractor
Smart Home Tech Worth Investing In
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