5 Things to Know Before Taking Out a Mortgage

Are you finding yourself at that point in life where you’re finally ready to purchase your first home? It’s exciting and a bit scary, but buying a home is a life-changing stage that isn’t to be taken lightly. A mortgage is a major financial commitment, and one that can result in major returns. This is the place you’ll raise your family and create so many memories for you and your children. If you need assistance with taking out a mortgage, you can learn about the Help to Buy Scheme here. So before you make the leap into this next stage of life, consider these important things before you decide to take out a mortgage and buy a house:

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Being “Prequalified” Doesn’t Mean Much

When you hear from a lender that being “prequalified” practically hands you your mortgage on a silver platter, it’s important to take that with a grain of salt. When it comes to actually getting a mortgage, what you tell the lender doesn’t mean much. They need to look at your actual financial documents before you can be guaranteed to be approved. So don’t get too excited about being “prequalified;” just make sure you can actually be qualified through your financial status.

The Lowest Rate Isn’t Necessarily the Best Value

What?! This goes against most people’s instincts, but just because you find a super low rate doesn’t mean it’s going to be the best in the long run. You need to consider the set-up costs and application fee in addition to the actual mortgage payments. You can use an online mortgage calculator to work out the full cost of the mortgage over time. Alternatively, you can find more information available from an adviser, so speak to an expert to work out the best mortgage rate for you.

What Does a Credit Score Mean?

Before you can get a mortgage from the bank, you will need to have a good credit score. This shows the bank that you can pay back your loans reliably and on time. If you have tons of debt racked up that you’re paying back late, you’re not going to get a mortgage loan from the bank. So make sure you understand what a credit score means and how to raise yours.

Look at All the Costs

Don’t take anything at face value when it comes to a mortgage. The bank will tell you what you owe but you should ask for a detailed, itemized list of the estimated closing costs when you sign your loan. The bank is actually required by law to provide this for you.

You Can Bargain For a Better Rate

It’s pretty obvious in today’s society that the best way to get a good deal is to shop around. But many people don’t really apply this to finding a great mortgage. You can be open about the fact that you’re shopping around, and ask different lenders to lower their rates. You never know what you could get if you just speak up.