For many, buying a house is the largest purchase they will ever make. Homeowners typically stay in the same place for at least five years, so, understandably, prospective homebuyers often look into mortgages. Even buyers who do thorough research to prepare won’t necessarily find all the inside information they need to get the best rate.
The first thing homebuyers should do is get honest with themselves about their budget. It’s a good idea to be flexible as much as possible. Stretching the budget and overspending on a home can be a real problem if something happens to the buyer’s primary income source. Besides that, being prudent and building equity in a starter home now can mean having a better chance of purchasing a dream home later on.
The next is to do some research about the process of applying for, and getting, a mortgage. For example, many people believe they will get a preferential rate at the bank where they have a checking account. That’s not necessarily true. Comparison shopping is useful for mortgage rate research. Many people also don’t understand that mortgage rates update several times throughout the day. This is another reason it’s essential to get several different loan quotes.
Sometimes, people aren’t ready to interpret a mortgage quote, either. They may think that the interest rate is the best way to gauge the loan’s actual cost. In reality, that’s an incomplete measure. The annual percentage rate or APR is the best way to understand the value. The calculation for an APR includes the interest rate. It also takes things like origination fees, underwriting fees, and mortgage insurance cost into account.
Finally, everyone buying a loan should understand that the fees for credit checks and appraisals are not standard. Many people expect that the state regulates these, but that isn’t the case. Some lenders are willing to absorb the cost of fees to attract customers in a competitive market. Others don’t do that. This is yet one more reason it’s essential to get several quotes before deciding on a mortgage. There will be a range of offers and deals available.