How To Shop for a Mortgage
So, you're ready to take the plunge and buy your first house. This probably means that you're also looking at getting your first mortgage. This is a big step, one not to be taken likely. In order to make the best decision, there are a few factors you'll need to consider.
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.
To avoid paying mortgage insurance, you'll ideally put about twenty percent down. If you can't get this, you'll have to pay the extra fee designed to cover the banks for the extra risk they are taking on. It may be unavoidable, but its nice not to pay this if you can.
The biggest key with a mortgage is to make sure you get one you can easily afford. A common rule of thumb is that no more than 35 percent of your take home income should be your mortgage payment. Over extending yourself can have terrible consequences (as this latest mortgage crisis has shown). Be prudent.
Once you know how much you can afford, you need to figure out what type of mortgage you want to get. There are many different types. The 30 year fixed rate is the old standby, but there are other way to go. 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.
So, I hope this helps you understand the basics of shopping around for a mortgage. This is not something to be taken lightly, and you should certainly do your research to be sure that you get the best options you can. Good luck in your house hunting!
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.
To avoid paying mortgage insurance, you'll ideally put about twenty percent down. If you can't get this, you'll have to pay the extra fee designed to cover the banks for the extra risk they are taking on. It may be unavoidable, but its nice not to pay this if you can.
The biggest key with a mortgage is to make sure you get one you can easily afford. A common rule of thumb is that no more than 35 percent of your take home income should be your mortgage payment. Over extending yourself can have terrible consequences (as this latest mortgage crisis has shown). Be prudent.
Once you know how much you can afford, you need to figure out what type of mortgage you want to get. There are many different types. The 30 year fixed rate is the old standby, but there are other way to go. 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.
So, I hope this helps you understand the basics of shopping around for a mortgage. This is not something to be taken lightly, and you should certainly do your research to be sure that you get the best options you can. Good luck in your house hunting!
About the Author:
David Williams is the owner of the Denver Home Mortgage site, devoted to helping you learn how to get the best mortgage rate in Denver and much more.
posted by Debt Consolidation Loan at
6:22 PM
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