Owning a home is probably the number one wish for people all over the world. Apart from the fact that you own ‘your’ home and can personalize it to your tastes, it is also a wise real estate investment.
Realty prices go only one way – up! With the population growing, the demand for real estate is constantly increasing. Apart from some freak instances, like the economic crisis, investment in real estate always pays off in the long run. Another factor that has contributed to the rising demand for real estate is the easy and quick availability of mortgages. Since real estate is an immovable property, lenders consider it to be a safe credit option.
Finding the Best Mortgage Deals
Anyone can avail a mortgage for a new home today. However, not everyone is able to manage the best deals. Getting the best deal from a mortgage is an activity that requires a lot of preparation, study, and deliberation. Since an investing in your own home is probably the single largest household investment in an average American’s life, it is worth the while to spend some extra time to ensure that the rates and terms are conducive.
A sure way to get the best rates is to have a good credit history. Start by ordering a free credit report from the three major credit bureaus – Equifax, Experian, and Transunion. If you are unable to understand the report, consult a financial expert to tell you what you need to do, to improve your credit rating. Simple investments like a life insurance go a long way in securing good credit. If your credit report is not impressive, it is worth the wait to ensure that you pay off some of your liabilities, since your mortgage payments will be an additional strain on your finances.
State-sponsored mortgage schemes usually come with a lower rate of interest. If your employer has a mortgage scheme, it is a good idea to opt-in since they offer the best rates. Try and opt for a medium-term loan, for say 10-15 years. These usually have the best interest rates compared to short-term or long-term loans. However, try and restrict your monthly mortgage payments to less than 30% of your household income.
Different Properties Carry Different Rates
Mortgage companies have different rates based on the type of real estate. For example, a home at a co-operative housing society will get a better rate than an undeveloped area. It also makes for a safe and wise decision to invest in areas or projects that are preferred by the mortgage companies, since it is an indication of the future value of your property.
The Federal Reserve recommends that you shop, compare, and negotiate while looking for your mortgage. Consider all costs like interest rates, points, fees, down-payments, and insurance. Wherever possible, seek information in dollars rather than percentages or points since that will help you compare the information easily and make a well-researched decision. Also look out for special discounts you may be eligible for, like a veteran’s scheme or a senior discount. At the end of the day, seek the advice of a professional to help you figure it all out and choose the best scheme.