Tuesday, May 10, 2011

Basic Mortgage Comparison Tips And Tricks

Assuming the day has finally arrived and you want buy your dream home. The odds are quite high that you do not have the whole amount required to finance the purchase in full. Rather, just like purchasing an auto mobile, you would probably opt to put up a small percentage down, and then make monthly payments towards the remaining amount. This is what is known as a mortgage loan .

Just like with any other purchase, comparison shopping is the key when it comes to financing your dream home. The wide gamut of terms and conditions associated with different categories of mortgage plans can be very nerve-racking, a situation that may leave most home buyers unsure of how to approach the process.

In order to get the best possible loan, you will need to use a comparison strategy that addresses key points including the interest rate, the tenure, the terms and conditions, and any other applicable fees,

The interest rate is the first point of comparison. Always get a rate that would be in your best interest. Mortgage loans could have variable or fixed rates that are subject to changes over the loan tenure. By projecting the course in which the economy is likely to take over the tenure, you can be able to decide on the best type of interest rate. A fixed rate is one that remains 'fixed' till the loan comes to maturity while a variable or adjustable rate is one which fluctuates with the changing economic times.

The loan term is the other aspect of the comparison process you should focus on. You should identify the most preferred term of your loan. mortgages typically come written for tenures of 15, 20, 25, or 30 years. The best tenure will always be determined by your income level, and the amount of interest that each offer attracts.

As is therefore expected, a 30-year credit will attract lower payments than its 15-year counterpart, but the buyer will not experience much savings as they would have with the 15-year credit. The idea here therefore is to ensure that the monthly payments you make are reasonable enough in comparison to your net income. This way, you will see to it that the balance left will be able to cater to other financial obligations without affecting your payment schedule.

It could be tempting to stop your comparison shopping the moment you find the ideal rate and term, but it is advisable you delve deeper into what the contract of the loan provides and consider other equally important things such as applicable fees. For instance, should you opt for bi-weekly or weekly payments; you may incur processing fees which may negate the gains you make from the low interest rate.

The idea here is to account for all applicable fees and have a rough estimate of just how much you will end up paying once the deal is done. In some situations, you may discover that opting for an arrangement that otherwise seems to carry a somewhat higher rate but has no applicable fees could actually be much cheaper in the long run.

Tag : mortgage ,mortgage comparison ,tips ,tricks


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