5 Mortgage Items Every Home Buyer Must Know
September 21, 2017
A decision as important as buying a home shouldn’t be made “on the fly.” By familiarizing yourself with the home buying process and learning all you can about home mortgages, you can make wise home buying decisions. Here are a few home mortgage facts every buyer should know before they sign on the dotted line.
New Buyer Programs
If you’re buying a home for the first time, you may be attracted to so-called new home buyer programs offered by lenders in your area. These programs may sound good, but rarely offer any advantages to getting the home loan you desire.
No program offers exclusive home mortgage privileges to new buyers. By shopping around, however, you can get a better idea of what’s available and what kind of loan you qualify for. Comparison shopping makes it easier for you to find the mortgage company and loan best suited for your situation.
30-Day Window for Mortgage Payments
Paying your mortgage on time is essential to building a good working relationship with your lender. If you’re a few days late, you may be charged a late fee, but it won’t affect your credit.
In fact, you actually have a 30-day window to pay your mortgage before it counts against you on your credit rating. Creditors don’t really consider payments late until the 30 day mark. If you’re required to pay by the 15th of every month and you delay until the end of the month due to financial problems, your tardiness won’t harm your credit standing. Knowing you have this recourse gives you a little breathing room in meeting your financial obligations when times are rough.
A Matter of Interest Rates
The effect that interest rates have on a mortgage depends a great deal on loan size. The larger your loan, the greater the impact your interest rate will have in determining your monthly payment. When discussing loan options with your lender, take time to calculate how your interest rate will affect your mortgage. If you’re taking out a large loan, such as $300,000 or above, try to get the lowest interest rate possible to make it easier on your budget.
Extra Mortgage Payments = Quicker Payoff
If you have the financial means, it’s to your advantage to make extra payments on the principal of your loan to pay off your mortgage quicker. Paying off a home mortgage early gives you extra money to put in savings, investment portfolio or retirement. You can also benefit from an increase in equity and greater leeway to refinance by making extra payments on your mortgage.
Foreclosure Isn’t Instantaneous
Every homeowner runs the risk of foreclosure. Financial difficulties could make it impossible to pay your home mortgage on time. If you miss four home mortgage payments in a row, your lender can start foreclosing on your property.
At the onset of financial problems, contact your lender and work out a solution to avoid foreclosure. Your lender may modify mortgage payments or negotiate new loan terms to help you over the hump. Open communications with your lender could prevent foreclosure when you’re going through a financial slump.