Many people fail to prepare when looking to buy a home and it leads them to have a bad experience. By understanding the core concepts of the home buying process, you increase your chances of success.
With the help of the professionals at PRMI Cascade, your dreams of buying a home are within reach. For many people, the mortgage process remains a mystery they are yet to solve. Unfortunately, this leads them down a dangerous path that puts their home at risk.
Instead of going at it alone and feeling in the dark, seek professional advice. Having an expert by your side makes the process easy and enjoyable.
Pick the right mortgage period
Unless you’re quite confident about your future finances, you are likely to go for a long-term mortgage. Such mortgages stretch between 10 and 30 years, while the shorter ones can be as low as five years. The length of your mortgage has a considerable effect on your finances. While lengthier terms correspond to lower monthly payments, they increase the final cost of the house.
The total interest on a 30-year plan is way higher than that on the 20-year plan. It will also take you considerably longer to build equity in the home if you opt for a longer repayment term. Calculate the final cost of the house based on all mortgage plans and pick one that suits your financial position.
Keep the interest rates low
It is one thing to keep the monthly repayments low and affordable and another to keep the interest rates low. The interest rate on your mortgage determines how quickly you build equity in the home. You will take longer to build equity if the rates are high and your monthly payments are low.
On the other hand, lower interest rates enable you to build equity quicker even when the monthly repayments are low. See, the interest on the loan doesn’t count repaying the principal amount, meaning it won’t help you build equity in the home.
Buying a home is a delicate process that requires adequate preparation. Only by understanding the core concept of the process can you make the best choice and increase your chances of success.