Are they looking to move up from renting to buying? Answer these questions to get the best mortgage quote on the market for home buyers looking to move from renting to buying a home; the excitement is usually tempered by the overwhelming cornucopia of mortgage choices and options with multiple lenders available online or through more traditional brick-and-mortar institutions like banks. But getting a mortgage quote is easier than it seems when homebuyers enter the mortgage market with more answers than questions. So before starting their mortgage search, home buyers should know the answers to the following questions to get the best mortgage quote possible.
Mortgage Quote
- What Type Of Home Do We Want? – Would a new home be better than a foreclosed one? A condominium or a townhouse? Four bedrooms or three? What part of town is more desirable, and does it fit our lifestyle?
- What Can We Afford? – Consumers should compile a detailed profile of their finances to include an all-encompassing monthly budget. Does the family have a car payment? Is there money going to a savings account for retirement? What is the average monthly tab for groceries or eating out? Are paychecks disbursed monthly? All this information should be compiled to get a complete financial profile.
- How Is My Credit Rating? – Home buyers should get a copy of their last credit rating report to clear up any discrepancies and to ensure the information listed on the report is accurate and up to date. Consumers with a bad credit rating usually don’t qualify for the lowest interest rates and may even be denied the best available offers. A difference of even 1 percent could mean thousands of dollars more over the life of a mortgage, so it would be wise to improve low scores before applying. A good credit rating also assists in getting pre-approved for better rates.
- Did We Look At Pre-Approval? – A mortgage pre-approval lets potential homebuyers know what they can qualify to borrow and usually comes with a rate-hold to protect consumers in case interest rates rise. A pre-approval also provides more leverage when dealing with home sellers because it shows consumers are serious about buying.
- How Much Do We Have For A Down Payment? – Canadian home buyers with at least 20 percent of a home’s value can skip purchasing mortgage insurance which is required by law and protects lenders in case of a borrower’s default.
- What Terms Are Desirable? – Trying to figure out where interest rates will be in a year or two is challenging even for the most seasoned economists, so instead, consumers should know what they can live with in terms of payments, whether they are monthly or weekly. A mortgage term is the number of months of the agreement between a consumer and lender and typically runs from half a year to 10. When the term is over, the remaining balance can either be paid entirely or a new term is renegotiated. Short terms usually are for two years and below, while long terms are for three or more years.
- Do We Want A Fixed Or Variable Rate Mortgage? – A fixed-rate means the interest rate is locked in for the mortgage’s term, so a home buyer’s payment of loan principal and interest rate remains constant. It’s inflexible when rates fall but protects consumers when rates rise and allow simplicity when budgeting one’s income. Conversely, a variable rate mortgage provides wiggle room when interest rates fall, meaning more of the mortgage payment goes to the principal, reducing the interest paid. The opposite is true when interest rates rise, and consumers pay more interest and less of the principal balance.
- Do We Want An Open Or Closed Mortgage? – Open mortgages allow borrowers to repay a small portion or all the balance whenever they choose and are available for up to one year, and typically have higher interest rates. These are good if the homebuyer isn’t planning on staying in the home very long or if they are expecting money to come in from a different home sale. Closed mortgages are usually lower-interest loans and are for a fixed number of payments for terms of up to 10 years. Also, penalties generally apply if a consumer wants to pay off the mortgage early with a closed one. bank rate
Once these questions have been answered, getting a mortgage quote will be much easier, especially with so many available options. And to help consumers compare mortgage rates, the mortgage payment calculator here shows how more significant down payments or varying interest rates affect their mortgage quote and how they can pay off their homes sooner.
