Buying an ew house is one of the most exciting things a person can do in their life. Be it your very first house or simply an upgrade, the process of looking at properties and imagining yourself living there is a wonderful experience, made even better when you actually get the keys to the place which you have seen. The most important part of getting that house which you want is not just about finding it and putting a bid in, the key is really to find a good mortgage with a solid mortgage lender, so that the financial side of things is taken care of. To make sure that you get the right lender, here are some things to first understand.
Low Interest Rates Not Always Best
You will of course want to find a mortgage with the lowest interest rate possible but it is important to understand that this is not the be all and end all. Very often you will find mortgage rates that have been almost artificially reduced by adding upfront discounts or adjustable rates which can give the overall appearance of lower interest rates. In many cases the lower it looks, the more expensive it is so be sure to check all of the details before you sign.
Low Payments Beware
Naturally you will also prefer a mortgage which offers low payments as this can take the pressure off you regarding your monthly finances. If you judge the mortgage by the payment alone however, you could be making a very grave mistake. The reason behind this is that lower payments usually mean a much longer mortgage term or the inclusion of huge up front costs which will have to be paid at a later date.
Keeping an Eye on Total Costs
Many mortgage lenders do a great job in over complicating the process so much that many people simply look at the headlines and sign up. One surefire way to get a general view of the mortgage is to look at what the overall cost is going to be. The overall cost includes everything to be paid back which you have borrowed plus interest fees and any extra charges. Of course if you pay the mortgage back early this cost will come down a great deal because of less interest to pay, but you should work on the assumption that you will take the mortgage full term. The overall payment can often be a telltale sign that you will be paying way over the odds under this agreement.
APR, Be Careful
APR deals with some of the issues of mortgage interest rate on its own by factoring in up-front fees and potential rate adjustments in the future. Unfortunately however, APR has limited value because it doesn’t consider the speed that a mortgage principal is paid. On top of that, APR bases future rate and payment adjustments for adjustable-rate mortgages on current index rates rather than forecasted future rates.
