Finding your best mortgage
If you’re like most people, buying a home is the biggest purchase of your life. In that case, you’re going to require a mortgage to finance your investment. Before settling on any mortgage, you’re going to want to choose the mortgage most appropriate for your financial circumstances. There are a great many variables to take into consideration, thus this guide will help you familiarize yourself with obtaining a mortgage and putting yourself in an advantageous financial position.
First of all, anyone seeking a mortgage should try to improve their credit score to the best of their ability. The credit score essentially demonstrates your trustworthiness as a borrower, a measure used by the lender to determine the terms of the loan.
(Read our previous blog post to gain a deeper understanding of the inner workings of your credit score.)
You can obtain a mortgage from one of two primary sources, a bank or a mortgage broker. A bank is often the first-time home buyer’s initial mortgage choice due to familiarity, but one should always consider working with a mortgage broker. The broker has a much larger mortgage product selection since they work with an extensive network of lenders, but the bank provides a more service more akin to a comprehensive financial consultation. At the end of the day, it comes the decision comes down to personal choice, but you should always explore every option before committing. Also, you should get pre-approved for your mortgage prior to the home search in order to know your maximum bid price.
Choose a loan with an appropriate monthly payment. Allow for enough financial breathing room to live your expected desired lifestyle, whether it be barebones or vacation-filled. Keep in mind, a larger down payment will always give you a better interest rate and overall contract terms such as the right amortization period.
There are many ways of categorizing mortgage loans, but you can split them into those with variable rate and those with a fixed rate. This decision often relies on a buyer’s risk tolerance. A young first-time buyer with limited capital is more likely to opt in to a fixed rate, but a mature buyer may choose a variable rate.
When choosing a mortgage, you will find much of the process consists of personal circumstance and preparation. So if you’re responsible and realistic, you should have no problem with your mortgage!