How to Choose The Right Mortgage Loan
The banking industry is booming for various reasons, one of which includes attracting customers by offering favourable loan terms. When deciding the right mortgage loan, it is important that you compare all options carefully, having first reviewed your own financial standing.
Instructions
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1
Get your financial information sorted out. Calculate what your income will be like in the next couple of years, or even more. This way you will have a fair idea on what type of mortgage loans to consider. At this moment, you will also be interested in the market interest rates. You will ideally be comparing interest rates of the past years, and the fluctuation which has taken place. This will then help you determine whether you are better off pursuing a fixed rate or an adjustable rate.
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2
Now look at the whole package. You will be considering your circumstances, whether you are acquiring a home for the first time, in which case you will ideally want the loan to be a manageable one. Moreover, you will include the assessment made in step 1 regarding your finances.
If you feel that your overall earnings will increase in the coming years, then you may go with a low down payment, with the ability to pay out large portions after some time. Also this will help you determine add-on features which you will like to have. -
3
The essential element to take into consideration is whether you will want a fixed rate or an adjustable one. Homeowners usually prefer the former as they feel protected if they know they will be paying fixed amounts in interest over the life of the loan. With little to worry about inflationary factors, they can compute the exact amount, even if the interest rate is likely to go down. However, this may still have an effect on the amount of taxes and insurance premium you pay on your home, if the interest rate goes up.
If you prefer taking the adjustable rate option, then you will need to be careful about certain estimations as you are likely to pay more every month, even though the initial payments will be minimal. However, you can still go this route, if your income will have an increasing trend, where you are likely to move to a bigger house in the next five to seven years. -
4
Compare the rates that are being offered. Almost all banks will advertise the lowest rates but base your assessment on the benefits you will get in the long run. This way you will have a fair idea about all charges which you will incur during the life of the loan.
