First Mortgage Loan

Most of us start planning and investing in order to buy the house of our dreams long before we get there. Similarly, it is equally important for potential owners to plan and arrange the required finances. Since a mortgage loan is the most common and advisable method of organizing the said, all the first-timers in mortgage loans are well advised to plan every step of the way, before embarking on the often long and winding journey entailing the acquisition of a new home.

While you can certainly conduct a research and choose one that suits your individual requirements, it is advisable to consult an established broker if you would prefer the expertise and guidance of a professional. Since the competition is increasing with the increase in demand, companies, banks, and even government sponsored enterprises are coming up with new offers regularly. A mortgage broker would be able to guide you through this maze, and inform you about the best deals available in accordance with your needs and financial situation.

While choosing among the many available, you need to know that you will be able to repay the loan under any circumstances. Go by the thumb rule, that the annual repayment of the mortgage should not exceed the gross income by any more than 27%, without counting 2 per cent the latter which will account for unexpected costs. If you are unable to pay a large down payment, go for Interest Only loans where regular payments are made to a separate investment plan which allows a lump sum to clear the principal at maturity and you need to pay the interest only during the term of the loan. Since the monthly payment is tax deductible during the interest only period, this will help you to save more money. If you prefer a fixed interest loan or FRM, do remember to go for refinancing if the interest rates drop after a while to avoid losing money.

Before applying for a loan, you need to get the approval to do so. This is a written document stating the size of the loan you may get and clears a major hurdle in the process by ensuring that you are provided with a free, no-obligation, pre-approved commitment letter . While you will qualify for a loan with a down payment of as less as four percent in case of good credit and a regular job, single parents may find it difficult. For others with credit problems, the Federal Housing Authority has an inclusive eligibility criterion and can insure your loan.However, if you would rather skip the paperwork, then many banks offer no-doc or low-doc loans, which are usually provided to people with excellent credit as they require minimal financial information, and often carry a higher interest rate (0.25-0.50% higher).

Study the finer details, read between the lines and be clued in with regard to your venture. With due diligence, you won’t have any problems researching and financing your first mortgage loan. Good luck!