Cutting through the mortgage jungle

When you plan to buy house, your mind is torn with plenty of questions. In which neighborhood should I buy? How many bedrooms do I really need? Do I privilege a view or interior square footage? And of course the basic question: How much can I afford? And that’s when the word “mortgage” becomes part of your everyday vocabulary.

Definitely, the financial market looks like a jungle if you are not in that field. The most popular product is the 30-year fixed mortgage. If a long term loan scares you or if you want to get lower interest rates, you can look into the 15 years mortgage.

During the last few years the mortgage rates have been stable and low. They should be increasing soon. This will make your mortgage payments higher every month so be sure to plan ahead the perfect timing for your purchase. How do you plan?

First you should choose a mortgage broker or a bank to help you decide on which mortgage fits best your needs. Then let’s have a look at the situation on the market. Which are the average rates for a mortgage?

Firstly, for a 30-year-lease, 2 years ago the rate was 3.91%, 1 year ago 3.44% and now it has reached 3.56%. Further, the 15-year fixed rate is now it’s around 2.67%.

Since, it’s not so easy to understand which is the best mortgage for you, especially if it’s your first one, we have prepared a check list for you:

• Meet a mortgage broker before looking at homes. You need to know how much the bank will be lending to you and solve any credit score issues.
• Reimburse the more you can. All your debts that you have collected in the past like student loans, car payments and credit card debts.
• Remember always to pay on time to keep the good credit.
• It’s import to have a strong work background. Changing employer every year is not viewed very well.
• You’ll need to collect lots of documents for the lending company. Such as tax returns, bank statements, brokerage statements and other documents. They will also verify your employment and income.
• Avoid to buy for a certain period of time with the credit card while your request for a loan is pending.
• Check with different lenders or mortgages brokers which is the best solution for you and make sure you do your due diligence.
• You’ll have lots of additional costs. The closing agent can give you a preliminary HUD which will underline every cost. The closing costs vary from one loan to another and from one closing company to another. These costs include legal fees, title insurance, home inspection, appraisal, survey and county transfer taxes.