First-Time Homebuyers Guide For Understanding Mortgage Loans
It is not unusual for first-time homebuyers to find themselves preoccupied with the superficial aspects of buying a house. Things such as the type of furniture, appliances, and style or decor of your new home are not the most important things.
Information more valuable to know is the interest rate you will be liable to pay, your monthly mortgage repayments, insurance costs, and additional charges such as regional taxes and housing levies.
Countless mortgage lenders can assist you in closing the deal for a new home. Use online platforms such as topresearched.com to access ready-to-use compiled lists of premium mortgage lenders in your area.
These essential details about mortgage loans are all things first-time buyers need to know.
How Much You Can Afford
Homebuyers often make the mistake of not conducting a thorough analysis of their finances before even looking at listings. A financial analysis will allow you to determine your overall affordability.
An excellent place to start would be finding an online mortgage or bond calculator and using your current monthly rent payments as the proposed bond repayments. The calculator will then return the exact loan amount you qualify for by using the average interest rate.
Your Credit Score
Your credit score helps lenders decide the interest rate charged. College students and recent graduates are often encouraged to set up credit cards to access credit once they have entered the working world.
However, a low credit score really can be a double-edged sword as the lousy credit reflection will always lead lenders to decline your loan applications. The best way to boost your credit score is to improve your personal finances, pay on time, reduce debts, and manage credits well.
As a new homeowner, there are various one-off and recurring costs that you will have to pay. Once-off expenses include but are not limited to transfer duty costs, transfer costs, realtor or closing fees, and even some hidden fees. Monthly recurring costs will consist of rates and levies, insurance, and higher utility bills such as water and electricity.
It is crucial to note and include these additional costs in your overall affordability calculation. These fees and expenses often come as a shock to first-time homeowners.
A Purchase Offer Is Legally Binding
A pre-approval is when you pass the first step of the home loan approval process, and this step is not legally binding. It does, however, show lenders that your credit record is good and that the credit bureaus trust you.
Offer-to-purchase is the next step after pre-approval. Once you have been pre-approved by your preferred lender, you may progress to submitting an offer to your real estate agent. You will be legally liable to purchase the house if your proposal is accepted.
Additional Payments Can Affect Your Mortgage
One other important note is the impact of paying additional payments towards your bond.
A standard home loan repayment period ranges from 15 to 30 years, depending on the deposit amount and interest. Adding extra payments to your bond can reduce the loan repayment period significantly.
Whether you are a first-time homebuyer or a returning buyer, the different factors and aspects of a mortgage may lead you to make a purchase you may regret. Hence it is of absolute necessity to conduct thorough research before committing.