There are a few purchasing decisions you’ll make in your life that will outsize all others. These are the big life decisions, the ones that the next ten years of your life will very much revolve around.
The decision to buy a home is one of those big purchases, and one millions of people make every year. It’s a decision you’ll want to make sure you are getting exactly right before going through with it.
It’s important to do your research and ensure that you are prepared to take such a big step.
A place where many first time homebuyers make a mistake?
When they’re shopping for a mortgage.
If you’re trying to lock down a mortgage plan so you get your first home, read on.
We’ll walk you through the essential questions you should be asking before you sign on any dotted line.
How Much Money Can I Borrow?
When it comes to getting a mortgage for your home, it is essential that you get a good grasp on what is and isn’t possible for your particular situation.
The act of getting a mortgage depends on a lot of particulars, and your situation might not mirror another person’s.
One of the first things you’ll need to do is see what’s possible given your own background.
When talking to a mortgage lender, start out with the big and broad basics. For example, how much money will they allow you to borrow?
The answer they give you will likely depend on a number of factors, including your income level, your employment history, and your credit.
If you have low income, are unemployed, and have poor credit, you’re likely to get offered a whole lot less money than someone who has the inverse of that background.
That is if you get an offer at all.
If you’re a veteran or even if you’re a first-time homebuyer, there may be special government programs in place that can help you to borrow more money.
Talking to your lender about what programs you qualify for can be helpful.
With these basics under wraps, you’ll have a much better idea of how your home buying process is going to go.
How Much Money Will YOU Need?
Now that you know how much money the lender will be willing to give, it’s time to see how much money they’re going to want from your side of the bargain.
Getting familiar with how much the lender will require as a down payment will help you to determine if you have the money required to go through with this deal.
You’ll be able to budget and plan for what will be a decent chunk of change out of your pocket.
In most instances, lenders will want to see something close to a 20% down payment.
However, just because this is the standard doesn’t mean it’s the only option out there.
Some lenders pride themselves on allowing a low down payment amount, and there may be even some that require no payment at all.
Each specific lender might have different solutions in regard to their down payment requirements.
If the percentage or amount they suggest is too high for your taste, see what options they’re willing to offer if you express this concern.
You might be surprised at what kind of deal they may be open to.
Be sure to use your gut and ensure the lender you’re working with is trustworthy: some lenders might offer a deal that really is too good to be true.
What’s the Interest Rate?
The most essential question you’re likely to ask your whole meeting with a lender is about the interest rate.
This the money borrowing aspect that we’re all likely familiar with, for better or for worse.
The lender will likely have already told you (even before you’ve reached out) what interest rate they are to expect on the money they give out.
However, when talking about interest rates, it’s important to ensure that this percentage is the full story.
Are there any other additional fees involved in your payment?
How often is the payment interest rate adjusted over time, and is there a maximum adjustment that can be made?
You might be paying off your mortgage for many years.
It’s important to think long into the future in terms of what this number could reach.
How Does the Lender Use Their Money?
In today’s climate, it’s more important than ever to work with companies and lenders who are committed to using their money in a responsible fashion.
The last thing you want to find out is that the business you’re doing with a lender is somehow contributing to unethical actions.
Far too many money lenders have their money in shady places.
They might be supporting anti-environmental policies or working with companies that don’t respect the rights of their workers.
If fighting these injustices are important to you, you might want to ask your moneylender about the kind of practices they employ and who they often work with.
You can read this article for suggestions about certain financial institutions that are more ethically-minded.
Tips for When You’re Shopping for a Mortgage
If you’re shopping for a mortgage and making your first big home purchase, it’s important that you collect the proper information.
Asking the above questions can be an essential move in ensuring you set up your financial future.
Need more financial advice or tips? Keep scrolling our blog for more.