Four Crucial Loan Tips for First-Time Home Buyers

Home buying is exciting and fun, especially for the first-timers. There are long-term dreams that are on the verge to get fulfilled, hence a great impatience to sign off the deal and take over the ownership. However, amidst that eagerness, one can commit mistakes that can lead to severe disappointments or financial setbacks.

One must understand that a real estate investment is an expensive one. Also, the mortgage liability that comes along is complicated and critical. So, to get most out of it and ride through as smoothly as possible, you have to do some research and be considerate enough of the following things –

  1. Assess your Loan Affordability

You might be eyeing a 5 BHK villa on popular streets of Montreal, but have to forego 70 to 80% of your monthly salary. Therefore, you better be realistic with your pocket limits and filter out the extravagant choices in the first step. Use a mortgage calculator to know what price of the home you can afford. That way, you will not have to waste time in looking over properties that are outside your budget or trying to get pre-approval for loans with high EMIs. Choose the programs where mortgage rates are within 50% of your disposable income.

  • Make Arrangements for Down Payment

Generally, banks and other lending institutions fund up to 90% of your property value; which means if you are buying a property worth $500K, you might get a loan up to $450K. But, that does depend on your lender and the type of loan you choose. So, be ready with at least 10% of the purchase price as the down payment of the home. If a large down payment is not your cup of tea, then look into FHA loans. Also, discuss with your mortgage broker for the other suitable options.

  • Maintain Good Credibility

Every mortgage lender first evaluates your credit report before loan approval. Hence, if you wish to get the best deal on your home loan shortly, you have to start improving your credit status from now on and fix the flawed records as well because a low credit score decreases your chances of getting loan approvals. You just keep up with the habit of clearing off the bills and not apply for any new credit if you aren’t sure of it. After all, you don’t want to mess up your credibility during the loan process in case the lenders pull out your credit report for the second time.

  • Compare Rates

All loan programs are not equal. Even the mortgage programs offering the same interest rate can differ from each other and its benefits can vary from lender to lender. If you find yourself in a similar situation, just be thoughtful of the components that go into determining its overall price. Then, make a sensible comparison between various banks and lenders. Make sure you watch over the seasonal offers and subsidized rates too.

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