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  • What You Need to Know When Shopping for a Mortgage

    Posted Under: Home Buying in Austin County, Property Q&A in Austin County, Credit Score in Austin County  |  January 16, 2013 12:39 PM  |  366 views  |  2 comments

    Research

    Shopping for a mortgage requires that you be well-informed about the market forces that influence mortgage prices and the real estate industry. To this end, researching the finances behind mortgage borrowing is important to help you make the best decision that suits your needs. In addition to understanding mortgages, research how the mortgage process works so that you can anticipate every step and can collect all the documentation you need in advance of the final closing. You should also be well-acquainted with your own financial situation, including credit reports from the major credit reporting agencies, TransUnion, Experian and Equifax.

    Interest Rate

    The interest you pay on your mortgage is an important factor to consider the long-term cost of your loan. Interest rates vary depending on the type of mortgage you have and economic factors. For example, if you have a fixed-rate mortgage, only an established rate is applied to your loan for the entire time you pay on the loan. In addition, interest rates are in continuous adjustment by consumers, the markets and the Federal Reserve. Securing a good interest rate often depends on the right economic timing.

    Maturity

    Mortgage loans come in different lengths of time called maturity. For example, 30-year mortgages are common among most home buyers, though 20- and 15-year mortgages also exist through some lenders. Note that the maturity works in concert with the interest rate to determine the real cost of paying your mortgage loan for the whole maturity period. Paying off a 30-year mortgage early provides considerable savings in interest payments in the long term.

    Affordability

    The financial responsibilities of homeownership include paying the mortgage, insurance, maintenance, taxes and utilities. Affordability is a key issue that you should not overlook, since your mortgage payment alone is not an accurate reflection on how much you will actually spend once you have your home. Form a budget of monthly expenses and income to measure how much house you can actually afford. This helps prevent overextending your financial capacity and reduces the risk of losing your home if your income changes.

    Costs

    Like many financial transactions, entering into a mortgage contract incurs costs. Generally, these costs are in the form of closing costs, real estate brokerage fees, a loan-origination fee, and points that you may have to pay in addition to interest. Federal agencies such as the Federal Reserve recommend that you shop around and compare mortgage offers to help minimize the costs of obtaining a mortgage and avoid an overly expensive long-term commitment.

    source : http://homeguides.sfgate.com/need-shopping-mortgage-2169.html

 
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