Your First Mortgage-
Buying your first home is an exciting moment, whether you’re buying a studio apartment for yourself or a house for your family there are fewer joys in life like using your new key to unlock the front door for the first time. People are buying their way into the home owner’s world at a younger age than ever before; this is great for them, but not so great for their bank accounts. Age is a huge factor for lenders when deciding who to grant a home mortgage to, but you don’t need to be discouraged if you’re young, you just need to be prepared. Ready yourself and save money on your first mortgage with these three tips:
Plan in Advance for a Larger Down Payment
There are very few lenders who will grant a mortgage without a down payment. Depending on your financial situation and the terms you receive your initial payment can be quite small or relatively large. Regardless of where you fall on the scale you can get a better deal or more favorable terms from your lender by paying more than the required down payment. This strategy requires more money up front, but if you prepare for it you can save a lot of money on interest over the life of your mortgage.
A Longer Plan Can Save You until You’re Ready to Refinance
30 year fixed-rate mortgages are the standard and the most popular because they have the lowest monthly payment and therefore allow you to buy the most house. If your career is just getting started and you know you will be in a better financial situation in a couple of years then this will tide you over until you’re ready to refinance with higher monthly payments and a shorter term. (Paying a little more each month can often knock 15 years off your mortgage and save you hundreds of thousands of dollars over the life of your loan.)
Cut Down Your Other Loans and Debt
The first thing a lender looks for when deciding whether or not to grant you a mortgage is the amount of outstanding debt you have to your name. If you’re planning on buying in the near future you should take the time to try and pay off your debt or overdue student loans. They don’t need to be paid off fully; a small dent can be enough to get you more favorable terms on your mortgage. You should also try not to miss a single payment on any bills you have, as every one you miss reflects poorly on your Credit Rating i.e. your ability to make monthly payments, something that lenders require you to be able to do.
With mortgage rates at their lowest in almost 60 years there has never been a better time for first time buyers to take the leap and purchase their first home. Even if times are tough you should not be discouraged, there are plenty of ways to save money on your first mortgage. You can benefit greatly by planning as far in advance as possible to ready yourself for a larger down payment and getting rid of any outstanding debt. Now all you need to do is enjoy your new home.
Photo Credits: by International Real Estate Listings