Buying a house takes a lot of responsibility — from searching for the perfect home and dealing with real estate agencies to preparing legal documents and negotiating with contractors — and the process can drain you in no time. The most challenging part, however, is the preparation for your current and future financial obligations. It’s best to take time and weigh your options to make smart decisions. To point you to the right direction, here are some suggestions when applying for housing loan:
#1: Know your financial capacity
Wasatch Peaks Credit Union and other lending companies say that knowing your financial capacity is important, as it can leverage your loaning options. Put yourself in the lender’s perspective and evaluate your income, credit history, and debt service ratio. Compute the interest rate and your monthly expense. This can help you determine your capacity to repay a loan. And as everyone would say, “never buy anything you can’t really afford”.
#2: Find out the amount you need to borrow
By now you should know the property’s appraised value. Mortgage loan companies usually lend up to 80% of the property’s selling price depending on the circumstances. Discuss the amount you need to borrow from your loan officer, and consult a financial advisor if necessary. Repossession or property foreclosure is the last thing you want to happen, so be smart with your decisions.
#3: Evaluate your financing options
Now that you have fully sorted out your financial capacity, you need to evaluate your financing options. Find out which is the best scheme for you and be familiar with the terms and monthly amortizations.
Keep in mind that mortgage value may differ. Even if your prospects offer the same interest rate, you should also check other hidden charges. Compare the offers thoroughly, so you can have accurate numbers. Late payments can cause you a headache, so know your priorities to avoid penalty fees. Set your calendar for your financial obligations.
These are only some of the things you should know when dealing with housing loans. Again, always take your time and gauge your options.
About Tyrone Archibeque
Tyrone Archibeque is a Fine Arts instructor at a university in Texas. He also runs an online clothing business with his sister.