The day has finally come when you want to purchase that dream home. The chances are quite high that you have not the whole amount needed to finance your purchase. What this therefore means is that just like buying an automobile, you might opt to put up a tiny percentage of the whole amount down, and then make agreed upon monthly installments towards the remainder of the balance. This is what is referred to as a mortgage loan.
As is with any other purchase the key lies in comparison shopping when planning to purchase your dream home. The many different and complicated terms and conditions associated with the different types and packages of mortgage plans can not only be nerve-wrecking but can also be very time consuming, a situation that normally leaves most first time home buyers unsure of how to go about the process.
In order to land on the best possible mortgage loan deal, you will need to utilize an effective mortgage comparison strategy that focuses on key points such as the tenure, interest rate, the terms and conditions, applicable fees and charges, etc.
Interest rate – this is the first point to compare. Always ensure you get a mortgage interest rate that will be in your best possible interest. Interest rates for mortgages can either be fixed or variable. A fixed rate type of mortgage is one that remains ‘fixed’ for the entire loan tenure, until the mortgage comes to maturity. A variable rate mortgage is one whose interest rate would vary, or one which fluctuates with the changing economic times. By projecting which way the economy is likely to take over the mortgage tenure, you will be in a position to tell the best type of interest rate.
Applicable fees – it can be tempting to end your comparison shopping once you find the ideal term and interest rate, but it is always advisable to dig deeper into what the loan contract offers, and factor in other equally important aspects, specifically other applicable fees. For example, if you opted for a weekly or bi-weekly payment mode, you can incur processing fees which may counteract the little gains you will get from an otherwise low interest rate. The thing is, you should account for all applicable fees and know just how much you will end up paying after the deal is done.
Loan term – the loan tenure, or term, is the other important aspect of comparison that you should focus on. Based on your level of income, the amount of interest of each tenure, and your other financial obligations, you can be able to get a mortgage tenure that is ideal for you. Generally, mortgages have tenures of 12, 20, 25, or 30 years.