Are you out looking for a home loan mortgage? Before you decide on which one would be the best for you, you would need to find out all the details about what influences the terms and conditions of a mortgage home loan. One of the most crucial factors that would influence your mortgage home loan approval is your credit record. Other important factors are the repayment duration, the down payment amount, discount points, your income level, lock in period among others.
Research, Research, Research – The Need To Know It All
Before you enter any negotiations with the lenders you should know what the lowest rates that you could get with them, and what offers are floating in the market. You would need to highlight the factor that suits you best and accordingly negotiate the best deal.
1. Repayment period – do you want to have a long period of repayment or a short one? The longer the repayment period, the lower lower your monthly bills; however, at the end of the repayment period you would have paid a good deal more since the interest due would be concurrent with the period of repayment. The shorter the repayment period, the higher the monthly bills, but the total interest paid would be far less.
2. Lock-in period – this facility would insure you against the sudden raise in interest rates in a volatile market. This is an excellent way of protecting yourself for an increased interest rate. Try not to lock an interest rate for a period of longer than 60 days. Any longer, and you’re probably over-insuring.
3. Interest rates – There are two types of interest rates – the adjustable rate mortgage home loan (ARM) which allows initial lower payments and adjusts itself over the next years of repayment. This is a pre-agreed condition on a set period of time. The other type of interest is fixed mortgage rate which fixes a certain rate for the whole period of the repayment of the loan.
4. Down payment – ensure you understand what the down payment is charged for. Normally, a large down payment is required when your credit record is poor. However, you could lower the interest rates and improve the overall terms and conditions when you pay a high down payment – even when you have a good credit record.
5. Closing costs – there is a 3-5 percent charge as closing fee which depends upon the type of loan you are choosing. Often these costs as well as origination fees can either be re-negotiated or included in the home loan mortgage.
As mentioned earlier, there are many factors which influence the terms of the home loan mortgage and unless you are well acquainted with each and every one of it, you would not be able to really bargain for the best home loan.
Article contributed by Colorado’s Louisville real estate experts, Automated Homefinder.