This article sheds some light on a very important subject of many a home owner,
mortgage or home-loan and its effect on you. It helps if one understands what mortgage guidelines that’ll determine your application whether it is a new purchase or mortgage refinancing a home.
Fundamentally to be qualified for mortgage loan, most mortgage pre-approvals are based on four major factors;
- credit history,
- current income vs. debt,
- initial down-payment and
- credit score i.e. financial status based on employment history, assets held etc.
Hence one should ensure credit-worthiness is good in order to qualify for the best
Some do and don’t
- Save and pay a bigger down payment, since this will greatly reduce mortgage interest in the long run
- Use the internet and always shop around to find the lowest interest rates
- Search for flexibility of payment, or lock-in period which the minimum time you are not allowed to modify your payments. Why? Because you are always looking to pre-pay or even increase the monthly instalment amount in order to reduce mortgage interest in the long run.
- Another clause to look out for is PES, penalty of early settlement. This will cost you money if you want to refinance due to windfall bonus, strike a lottery or reduction of mortgage interests and you want to re-finance using another bank
- Be smart, read the mortgage documents, check out the interest rate i.e. fixed or variable, add on costs e.g. insurance, monthly statements sent to you, or even MRTA or MLTA. Always be alert and read word for word and be a savvy home owner. Otherwise you will be robbed or helpless once the loan agreement is signed.
- Consult a professional mortgage consultant might be a good idea. Don’t be a cheapskate, pay a good one who has your interests at heart and not only protects you but helps you to save money in the long run. After all don’t be penny wise and pound foolish. Remember, you are signing an agreement that will normally be 30 years contract and a huge chuck of your entire working life bonded to a mortgage bank.
Always don’t splurge on big ticket items before signing loan agreement, since the bank
lender is on the constant review of your creditworthiness and even down to the last
minute before loan disbursement. Be forewarned!
Happy loan hunting!