Finally, the time has come. The time to buy your first house, and, very probably, get your first mortgage. This is a huge step, one that takes care. To help you make this decision, this article will guide you through some of the basics of the mortgage process.
Here is a simple rule of thumb that is easy to remember: the bigger your down payment, the better. If you want to save on interest, avoid paying mortgage insurance, and lower your monthly payment, you'll come up with the biggest down payment you can. This isn't always easy, but it is often worth it.
If you can't make a 20 percent down payment, you'll very likely have to pay mortgage insurance, which is an extra fee assigned to the loan to cover the bank for the extra risk. Obviously, you'd like to avoid paying it, but might be inevitable.
The number one most important thing to figure out when trying to find a mortgage is how much you can afford. Overextending yourself on high mortgage payments is the path to financial ruin, so be sure to consider carefully what you can pay each month. One common guideline is that your mortgage should cost you no more than 35 percent of your take home income each month.
After you have sorted out the matter of how much you can afford, you'll need to decide on which type of mortgage you want. The class standby is the 30 year fixed rate mortgage, which means you lock in a fixed interest rate over 30 years of payments. You can also get mortgages with varying rates, and shorter terms. Be sure you research all these options.
If all this seems daunting, remember that there is no harm in renting until you can afford the mortgage you really want. Over extending yourself is always a bad idea.
This covers just a few of the basics of shopping around for a mortgage. The key is to seriously look at your finances, and do all the proper research before pulling the trigger. Get the best rates, get something you can afford, and enjoy your new home!
Here is a simple rule of thumb that is easy to remember: the bigger your down payment, the better. If you want to save on interest, avoid paying mortgage insurance, and lower your monthly payment, you'll come up with the biggest down payment you can. This isn't always easy, but it is often worth it.
If you can't make a 20 percent down payment, you'll very likely have to pay mortgage insurance, which is an extra fee assigned to the loan to cover the bank for the extra risk. Obviously, you'd like to avoid paying it, but might be inevitable.
The number one most important thing to figure out when trying to find a mortgage is how much you can afford. Overextending yourself on high mortgage payments is the path to financial ruin, so be sure to consider carefully what you can pay each month. One common guideline is that your mortgage should cost you no more than 35 percent of your take home income each month.
After you have sorted out the matter of how much you can afford, you'll need to decide on which type of mortgage you want. The class standby is the 30 year fixed rate mortgage, which means you lock in a fixed interest rate over 30 years of payments. You can also get mortgages with varying rates, and shorter terms. Be sure you research all these options.
If all this seems daunting, remember that there is no harm in renting until you can afford the mortgage you really want. Over extending yourself is always a bad idea.
This covers just a few of the basics of shopping around for a mortgage. The key is to seriously look at your finances, and do all the proper research before pulling the trigger. Get the best rates, get something you can afford, and enjoy your new home!
About the Author:
David Williams is the owner of the Denver Mortgage Loans site, devoted to helping you learn how to get the best mortgage rate in Denver and much more.
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