Getting the Right Mortgage for Your Home
Only a few people may be able to afford a house without getting a mortgage, which is a loan acquired to buy a home. Federal and private lenders loan you large sums of money and use your house as security. Signing a mortgage means pledging to pay the loan and agree to have your property taken away if you fail to repay the full sum with interest. The loan is referred to as a principal and we are expected to pay the principal with interest throughout the repayment period.
Sources of Mortgages
Mortgages are supplied by banks and brokers. Banks are limited in the products they can offer as opposed to mortgage brokers, who have access to an increased number of services since they work alongside several lenders. On the other hand, your bank is a familiar place for you. The bank will already have your information about your credit scores, income and down payments; all the criteria that need be assessed in order for you to get a home loan. You have established a relationship with your bank and they may guide you in spending efficiently. The choice ultimately comes down to a personal decision.
Pre-approval
Brokers, lenders, and realtors often suggest aspiring homeowners to first get pre-approved for a mortgage. The free service assesses the credit ratings and finances of potential buyers and provides them with an estimate of how much they can afford. Being pre-approved gives home buyers confidence while looking for a home. It narrows down their searches and gives them the information they need to negotiate. Pre-approvals can be done with the help of lenders and it is a good idea to provide them with in-depth information regarding your financial history, in order to get the most accurate estimate of your affordability.
Size of a loan
Home buyers can borrow up to 95% of the house cost and they will have to pay the other 5% in the form of a down payment. The crucial part of searching for homes entails considering the impact payments will have on your life. It is important to realistically go through your budget and consider what fits your lifestyle.
Mortgage plans
The task of choosing the right mortgage plan can be a daunting task for first time home buyers. Mortgage plans may come with an interest rate that varies in accordance with the market, instead of being fixed. First time buyers often choose fixed rate options to avoid running the risk of increased interest rates. However, once they have gotten accustomed to a fixed mortgage plan and monitored the market for a couple of terms, they may feel comfortable switching to a variable plan.
Contact Rob Smashnuk Team in Edmonton!
Getting a mortgage includes making a lot of important decisions. A good realtor can help you make one of the largest financial decisions of your life. Rob Smashnuk, a trusted Edmonton realtor, strives to assist each client to achieve their real estate goals through honest, friendly, and helpful communications and services.
Visit robsmashnuk.com to view all the services we provide. You may also call to chat with us at 780-916-4109.
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