With home loan interest rates reaching new lows around the globe, buying a new house does seem feasible today.
The US National Association of Realtors had even reported that the US real estate market suffered a 2 percent sales decrease in 2014. But if you put the adage no other way to go but up into the equation, house prices and interest rates will soon rise.
This makes buying the right home mortgage all the more important for you.
Here are the common mistakes you should avoid when shopping for a home loan, in order to find the best rate(s) possible.
Don’t make a big deal out of mortgage points
Simply because you can never tell until when you are going to be staying in your new home. One mortgage point is equal to 1 percent of your entire home loan, so if the total loan amount is $100,000, you may then be asked to pay $1,000 for a single point. And what you’re paying for is to lower the interest rate.
This service requires upfront payment and is ideal for individuals that are planning to live in a house for decades and beyond. But if you don’t see yourself staying in your property for a very long period of time, then you should think twice about buying points.
Don’t shop by fees or by rates at the same time
Determine what kind of strategy and loan structure suits you best. Factors that can influence your decision like your ability to pay for the loan, payment term, fees and rates, current market situation, and lifestyle should be taken into consideration.
If you shop by fees (e.g. mortgage points, hidden charges, taxes, etc.), your goal must be tied to being able to pay for the whole loan in a short period of time. Meanwhile, shopping by rates can mean you want to gain flexibility in how you will earn savings off of the interest and in how you will pay throughout the life of the loan. If ever you go shopping by rates, these low home loan rates from NPBS should be right up your alley.
Overpaying can happen when you bought a property with a 30-year fixed interest rate agreement but you ended up quitting it because you no longer need the property. Know that long-term mortgage engagements are more expensive than the other options, if not the most expensive, because the interest rate is high and you’ll be dealing with it for over two decades!
What you must do is to level your expectations to what you really need right now and in the near future. If you can pay for the loan within 5 years then getting a fixed mortgage with a low interest rate will be a great way to go. The right home loan should give you long-term results and help you stay on track of your financial goals.
Don’t hesitate to ask about any hidden charges and/or pricing adjustments
What are the odds you’ll be getting low interest rates in the next few years? If the housing prices climb up again, ads featuring low rates from banks and lenders will be almost everywhere. But don’t be fooled by it as these supposedly low rates may come with mortgage points, which you must pay upfront. So save yourself from future debts by assessing the breakdown of costs carefully, including mortgage points on offer, before closing the deal with your lender.
Sure, there’s no perfect formula for getting the best home loan rate, but there are ways to make buying a new house more manageable. Identify the strategy that can help you meet your needs, recognize the do’s and don’t’s, and stick to your goals as much as possible.