5 Tips to Follow While Mortgaging a Home

The interest rates on all mortgages were around 4% throughout the entirety of 2015 but this rate is expected to reach the 4.5 mark. Thus in order to save a significant amount of money with respect to interest rates, there is some proper protocol that has to be followed. For this particular purpose we have a few great tips for you.

1. Always improve your credit worthiness

The lender pays a lot of attention to your credit worthiness. Thus it is important to improve it as much as possible. You can do so by paying all your bills on time and keeping no dues as outstanding. Also don’t take any credit when you have the required amount of cash. This will only increase the risks of defaulting.

2. Save money for paying down payment

An amount of at least 20% of down payment is ideal but it is not always necessary. Most of the lenders expect the buyers to put down at least some 3%. However if at all you are interested in building a very sizable equity, you can always stash a very hefty amount of cash and also take it to your closing table.

3. Always seek for pre-approval

Before you actually go on and rush into your mode of house hunting you must get a pre- approval for your mortgage. This process is mostly used to determine how much of money exactly that you are qualified to borrow with dignity for a purchase of your home. Once you get this pre- approval, you will be able to have more expectations realistically.

4. Search for a legitimate and a proper lender

Since there are so many lenders present out there, it is important that you search for a lender that suits all your needs and requirements. This will help you to get the best interest rates. Rates that can significantly improve your financial position and this is possible if you are able to get estimates of loans from various lenders present out there. It is one of the important things to remember.

5. Research on all types of loans

There are different types of loans that are present out there. Thus it is important to do proper research and select the type of loan that appeals to you. This will help you to get the most out of your loan and also get all your needs and requirements fulfilled.

Need for Remortgaging

Many people wonder what a remortgage is. Remortgaging is the process where you pay off your existing mortgage, then switch to another lender.

There are valid reasons to consider this, but you need to consider the involved costs before doing so.

At a glance

1. You must check the value of your property. It may have increased in value since the last check. Typically with a higher property value in relation to the mortgage, more deals may be available to you if you decide to remortgage and you may be offered cheaper deals.

2. Always check the market for mortgage deals as this is the starting point for comparison between what you are paying now with what you might be able to get elsewhere.

3. You should be sure about the Ben what is remortgage edits of switching that outweighs the costs is. Even though you may be offered lower rates, you need to take into account any fees associated with switching along with the remaining length of your loan.

4. Remember to take what you have found to a mortgage broker as they have access to mortgages, which aren’t available on comparison sites, so you may be able to improve on what you’ve found. Such brokers also double check the costs and benefits of switching. Always ask for an advised service.

5. You must set a reminder to review your mortgage every year. People who remortgage also get an introductory deal on the interest rate and when this ends, they are usually put on a less competitive variable rate.

Check the costs

Before switching, you must be sure to check out the costs. Some lenders also offer fee-free deals to tempt people but if they don’t, people have legal, valuation and administration costs to pay.

The deals can be compared with the Annual Percentage Rate of Charge (APRC). The APRC provides a way of calculating interest rates that incorporate some mortgage-related fees in the calculation, giving a way to compare mortgage deals.

What might look like a money saving deal could end up being loss of money if you don’t do your research first.

Your lender’s valuation

You should bear in mind while applying for a mortgage that the lender’s valuation may just involve checking the outside of the property from the street.

If the valuation is much too low and you are losing out on a better rate as a result, then you should ask the lender to reconsider. There are also lenders who provide bad credit mortgages.