Mortgage >> Mortgage Resources >>  Home loan: Things to know before applying  

Buying your dream home is full of excitement; however it is entirely a new lesson of your life to learn. It is truly a big decision of your life. There are many things you need to learn before you start shopping your house. Here are some tips to consider before you apply for your mortgage.





Following these tips you will get more prepared, and close your mortgage with ease and comfort.

Learn the home loan jargon
There are different types of home mortgage out there in the market each offering unique benefits. You should learn about fixed-rate, adjustable-rate, VA & FHA mortgages. Know about rate of interest and its impact on your monthly budget. Also know EMI & PMI.

Analyze your affordability
Mortgage calculator is available to calculate your affordability which includes loan repayment, taxes and insurance. Prefer paying off maximum down payment, if you can afford. It will reduce your mortgage payment.

Manage your credit
Do not apply to avail any credit cards, store accounts or any other source of credit. It will alter your credit report and shall affect on the type of loan you are going to receive. Similarly, do not close your active accounts, even the one with zero balance. Accounts showcase your credit history, especially the one with good payment history. Pay off your bill regularly to avail home loan easily with lower interest rates. All these points will help out to manage your good credit history.





Proper selection of lender
Make some market research and select trusted lender with solid credentials. When shopping around, consider community banks, credit unions and other smaller financial institutions which might be more approachable that offers lower interest. Often banks and credit unions offer relationship discounts for the borrowers who consolidate range of banking business with one institution.
Relationship discounts are available from banks and credit unions for those borrowers who consolidate a range of banking business with the one institution. Home and personal loan interest rate discounts, term deposit bonuses, savings account fee waivers and credit card annual fee waivers are commonly offered. Look beyond to get finance from the banks. Check out the wide range of financial providers like credit unions, building societies, mortgage originators, community banks and NGOs etc. that may offer better interest rates or lower fees than the larger banks.

Ensure applied interest rates
Do not rely solely on the “comparison rates” described in the advertisements but beware of their shortcomings in terms of hidden cost and fees. Ensure the actual applied interest rates. Sometimes lenders sell their financial packages by just quoting monthly repayment amount which disguises the high interest rates.