So, you want to buy your first house and are excited because you just found one. However, considering your financial status, you might feel constrained and confused about whether to go for it.
You don’t have to be indecisive, especially when so many certified lending companies are in the market. Taking loans for personal and business purposes has never been as easy as it is now. Due to huge competition, lending players offer a variety of mortgages at lower interest rates and easy repayment terms.
The good news is that availing of mortgage loans qualifies a person for income tax benefits, and they get a rebate in the amount of tax to be paid to the government. Depending upon case to case, even your monthly installment (paid as interest) can also be excluded from the tax.
However, applying for a mortgage comes with its risks. Failing to pay installments can charge you heavy fines, and you may pay more than what you borrowed. Moreover, searching for a reliable mortgage lender and comparing what type of loan is best for your situation is no less than a hassle. This is why many people think twice before committing to a loan.
To help you navigate the process and establish a good relationship with your lender, here are a few questions you should be asking –
Q1: What type of mortgage will suit me the best?
This type of question should be raised when a qualified mortgage lender sits before you. Since each type of loan has certain pros and cons, it is best to ask for better clarity from the lender him/herself. A good gathers all possible information from you before recommending a list of options.
Q2: How much interest I need to pay?
Never hesitate to ask your lender for a direct interest rate quote. Ensure you have talked to at least a couple of lenders before to know the various interest rates you qualify for. This gives you a clear-cut comparison among lenders and finalizes the one suiting your needs the best.
Q3: What will be my down payment? Can any mortgage program help me in reducing it?
Usually, most lenders ask for a 20 percent down payment of the total selling price, but there are enough choices here, too. Abundant mortgage programs aid first-time homebuyers with low down payment and closing costs. Buyers with good credit scores can find mortgages at a meager 3 percent or even nothing at all. Some may get government help as well. Only a knowledgeable lender can help you walk through these various choices.
Q4: What is the total cost that I need to pay?
There are various charges involved in the fees that go to the lender. These relate to appraisals, credit reports, title policy, pest inspection, escrow, and taxes. A detailed loan estimate accurately records all these fees in a formally arranged document and helps you to budget accordingly.