By Bradley Songer on November 8, 2010
 A home mortgage is a loan which is provided by a bank or a mortgage company for residential purposes: basically, obtaining a home. It is typical for the home to be taken back by the lender if payments are not made on time.
Step One: Find Out if you Prequalify
Prequalify before shopping for a home. The most important component of the prequalification phase includes how much of a down payment the prospective buyer can put down on the total purchase of the house. This figure is calculated taking into consideration one’s total income, total expenses, previous and past debt, your credit report and credit rating and the home mortgage loan rates. In order to be qualified for a first home mortgage, a prospective buyer must have a good credit standing: including credit card statements, car title loans and other credit sources.
Step 2: Discover All of the Hidden Fees
Prospective first home buyers can save a lot of money on their first home by simply ‘shopping around’ and analyzing the different options available. Lenders typically have many different alternatives and variable fees. Prospective buyers should compare the interest rates, closing fees, annual percentage rates and hidden fees involved with their home purchase. Additional fees are often not displayed until after the transaction, so make sure you request all of the information up front.
Step 3: Apply an Adequate Down Payment
Basically, the higher the amount of cash a prospective buyer puts down in the initial down payment of the house, the lower the first home mortgage loan interest rate will be. For example, prospective home buyers who put down a down payment of twenty percent or higher of the total home purchase price will allow the home buyer to avoid Private Mortgage Insurance. A PMI loan will act as insurance and protect a lender in case the buyer cannot make the agreed upon payments for their home.
Step 4: Know the Fixed and Variable Interest Rates
Home buyers may choose a fixed or variable interest rate. A fixed rate remains the exact same through the term of the loan. Choosing a fixed loan is wise during periods of extreme low interest rates. A variable interest rate may adjust during the period of the loan. This is wise when you need to buy a home, interest rates are historically high, but will decrease in time. When the interest rate does decrease, you can then readjust your loan to a fixed rate. |