A Guide to Buying a New Home
If you've decided to make the leap from renting a home to owning
a home, you might be a little overwhelmed at the prospect of
shopping for homes and applying for mortgage loans.
While mortgage loans can seem a bit confusing at first, you'll
find that they aren't nearly as bad as they might seem once
you've taken the time to learn more about the mortgage loan
process.
While this is by no means to be considered a complete list of
everything that might come up while shopping for a new home,
you'll find below a brief guide to the process of shopping for a
home and applying for a mortgage loan.
Searching for a home
The first part of buying a new home is, obviously, finding the
home to buy. While there are obviously a large variety of homes
available on the market today, it's important to make sure that
you stay within the range of what you can afford. After all,
you're going to be making payments on your house for years...
don't get in over your head before you even get started.
You should also begin figuring how much of a down payment you're
going to be able to make, since the larger your down payment is
the lower your monthly payments will be.
Realtors vs. direct sellers
You may wonder whether it's better to buy a house that's up for
sale from a realtor or one that's being sold directly from the
homeowner. There are several factors that can be brought into
consideration when comparing the two, but the bottom line is
that the realtor has the financing contacts to help you along
and knows the real estate business much better than you do.
Discussing your options with realtors early on is also a great
way to find out which properties are for sale as well as about
how much the monthly payments on a mortgage will be for each.
Mortgages
When it comes time to take out a mortgage loan, you'll find a
lot of options presented to you. The term of the mortgage can
vary greatly, though most mortgages are for between 15 and 30
years.
You also might have to choose from a variety of payment options
ranging from standard payments to balloon payments in which you
begin with smaller payments and have a larger sum to pay at the
end.
You should also take into consideration other expenses such as
closing costs, insurance, and taxes before deciding how much you
can afford to borrow.
A realtor or financial attorney can assist you in making these
decisions as well as working you through the actual mortgage and
purchase process.
Refinancing your mortgage
After you've been making payments for a few years and have paid
off a significant portion of your mortgage, you might want to
consider refinancing to make repayment of the remaining debt
that much easier. Refinancing can allow you to use the equity
that you've built up in your home to secure you a new loan,
which is used to pay the outstanding balance on the original
mortgage loan.
The refinancing loan will have a new loan term, a new (and
hopefully lower) interest rate, and a much smaller amount to
repay than the original mortgage... meaning that you'll be able
to enjoy a reduction in your monthly payments.
This can not only speed up paying off your house, but can also
give you a little more money each month to do with as you
please.
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