Buying your home is one of the biggest investments that you make in your lifetime. How about arranging for the needed finances to make the purchase? Do you really have sufficient money for your new property? Well, most buyers do not have the cash ready and thus, they need to take out a mortgage loan for completing the deal successfully. The interest rates may rise or fall anytime and you should be smart enough to obtain the home loan when the rates are pretty low. This will enable you to pay off the loan amount on time.
Let’s discuss about 4 mortgage tips in 2007 at the time of buying home or refinancing loan.
1. Buyers need to make the minimum down payment – According to letting agents in Borough, it is important for buyers to make at least 20 percent down payment of the loan amount they are willing to take out. This will help the lender understand that you won’t turn out to be a defaulter in future. Also, he may agree to reduce on the interest rate if you request for it. However, if you fail to make the minimum down payment, chances are no lender will give approval for your loan. In case a lender agrees to offer you the home loan, you will be charged extremely high interest rate on it.
2. FHA allows obtaining loan with poor credit – Often homebuyers find FHA-insured loans to be quite appealing. The reason is that they can be given to the buyers who have bad credit rating. You need to have the credit score of at least 580 or more than that to get approval for FHA-insured mortgage with the down payment of 3.5 percent. However, if you have the score between 500 and 579, the lender will ask you to make at least 10 percent down payment for obtaining FHA mortgage loan.
3. Save money for the rainy days – The lender want you to have enough cash or assets to repay the loan, in case you lose your job or face some mishap. However, they do not want you to reduce savings on the closing costs and down payment amount. Letting agents in Elephant and Castle might calculate your minimum reserves in order to see if you are eligible to get approval for a mortgage loan. This will help him understand if you can pay off the entire amount within the specified time period.
4. Obtain loan amount you can afford to repay – A general rule is that your debt obligations every month should not be more than 36% of the income you earn. If you are having good credit score and sufficient amount of savings, the lender will agree to give you high loan amount. You may request your lender to reduce on the interest in order to make the loan payment affordable.
Apart from these, you need to manage your finances tightly before applying for a home mortgage loan. This will enable you to make the needed down payment and at the same time, save enough to repay the loan on time.