Mortgage Facts: 6 Basic Things
A house is an investment that should not be taken for granted. Understanding the meaning of mortgage loan can help you avoid losing your most precious property. Remember that you can lose everything you have if you are ignorant. Here are the things that you should know about mortgage loans.
The Interest Rate
Before signing a mortgage loan, you should know how much interest would you pay for the entire duration of the loan. Loan interest differs depending on the loan agency and the amount you are trying to loan. Sit with a representative, have a piti payment calculator and see how much interest would there be for your loan amount. Also consider the loan term aside from the interest rate. Short loan terms are usually the most expensive, even with the low interest rates.
Always avoid getting loans with interest-only policy. These kinds of mortgages will not help you gain ownership of a property in the long run. Adjustable mortgage loans are the most advisable, especially for new home owners.
Some loan agencies do not offer free inspection fees, closing fees, and other extra fees before they release the loan. Up front payments can greatly help reduce the monthly payment for mortgages. Consider the upfront payment and rolling costs seriously, especially for long term mortgage loans. The interest rate plus the rolling cost might stack up over time which could really become a burden.
Mortgage Loan Vs Cost of Ownership
Your mortgage terms should always coincide with the home you are planning to buy. Do not just go for any kind of house because your monthly income might not be enough to pay for its mortgage.
To know how much you will be paying in a month for a specific house, get a piti payment calculator. If you are getting just enough for your monthly income, avoid buying luxurious houses.
Remember that you will be paying more than just the mortgage loan in owning a property. A piti payment calculator will greatly help you calculate your entire monthly payment. After your calculation, you should assess if you can afford your prospective house. A low rate for the monthly payment will help you own the property you want. Never decide to get a different loan just to pay for something that you cannot really afford.
You must know the mortgage policies first before you decide to accept it. Are there additional fees if you cannot pay on time? If you want to fully pay the loan, is there any discount for the interest? Do not get a biweekly payment type of mortgage loan. If you want automatic payments every month, use a piti payment calculator first. If you will pay large upfront, make sure you get a lower interest rate, get guided with the best piti payment calculator.
Thoroughly check the mortgage terms to see if you will have to pay for extra charges. You can know if the extra fees are justifiable with a piti payment calculator.
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