So what is a mortgage? Realtor states that, "A mortgage — a loan to finance the purchase of your home — is likely the largest debt you'll ever take on." It is made up of several parts. These parts are the collateral you used to secure your loan, taxes, your interest and principal payments and your insurance.
Climbing the property ladder may seem a little too overwhelming but you have to take the path slowly especially if it's your first time to purchase a house. Learn to get the best deal out of it, but how?
1. How much do you want to borrow? The Mortgage Report states that mortgage calculators are now available online that could help you have an insight on how much money you should borrow. This calculator's "maximum loan size formula" won't tell you exactly how much you should borrow from a bank but instead it will tell you how much you can borrow from it. Factors you should consider when using the calculator are how much money you're willing to spend and how much you're willing to pay.
2. Which is the type of mortgage do you want to apply? You can choose depending on your ability to pay states Mortgage Calculator. Types of mortgage are:
a. Conventional Fixed-Rate. The most popular of all. This is popular because it allows the homeowners to have certainty in their month payments. If the interest rates increase then the rate of the loan will not change as well. But if it decreases then they can refinance.
b. Federal Housing Administration (FHA). This type allows the lender to put down a very small amount usually 3.5 percent much lower compare to most banks' requirements. This is focused to help those that have low incomes or poor credit.
Other types include: VA Loan, Adjustable-Rate, Interest-Only, Balloon and Reverse.
House shopping can be fun especially when you view different houses with your realtor. The new ambiance you want to live and the thought of a new life with your new house can be really exciting. So enjoy the process, don't make your house shopping only cause you stress.
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