Find Your Home
The Pacesetter Difference

mortgages-for-beginners-couple-buying-home-featured-image.pngWe all have someone we can call on to spot us a few bucks. If you need $300,000+ to buy a home, however, brace yourself for screened calls and blocked emails. Not many people are able to pay that kind price in cash, so that’s why banks and other financial institutions offer mortgages. Buying a home is likely the largest purchase you’ll ever make, so you’d be wise to do your homework before taking the plunge. Here are some basic points to get your feet wet.

Find out your options

When building a new home, your sales representative may have a list of preferred lenders that you can talk to. These lenders can help walk you through the mortgage qualification process, offer advice, and match you with a mortgage rate based on your specific situation.

Unless you work for a bank and have access to special mortgage rates, however, you may want to make use of some resources that are available to you, especially if you are buy a brand new home…

For some buyers, working with a mortgage broker would be the best option for finding the best rate and terms for your situation, providing options when your credit was lacking credibility. But with Pacesetter, shopping for a mortgage couldn’t be any easier.

In It For The Long Term

In many ways, talking about mortgages is like learning a new language, and what you don’t know can definitely hurt you. Two words that often cause confusion are term and amortization. The mortgage term is the length of time the mortgage agreement will be in effect at the interest rate you arranged, the amortization period refers to how long it will take to completely pay off the mortgage loan amount.

Most amortization periods are 15, 20 or 25 years. With a longer amortization, you will pay more interest but your monthly or bi-weekly payments will be lower. If you can afford a shorter amortization period, you’ll pay your mortgage off faster and save thousands in interest.

As for mortgage terms, a longer term offers more certainty as your payments stay the same over the duration of the loan, something that’s appealing when rates are low. By contrast, a shorter term gives you flexibility if rates go down.

To Fix Or Not To Fix?  

While the interest rate you pay has a big impact on your bottom line, so does the type of rate. When selecting a mortgage, you have two choices for interest rates: fixed and variable, and like most things in life, they each have pros and cons.

As the name implies, a fixed interest rate mortgage locks in the rate at a set amount for the entire term, giving you the security of knowing how much interest you’ll pay every month.

If you can stomach some uncertainty, the variable rate mortgage, which is adjusted to reflect market interest rates, can be lower, and may save you interest in the long term. The catch is that it’s hard to predict what rates will do in the long term, and a sudden upward fluctuation could have you calling that friend for some short-term financial assistance.


Paying It Forward 

If realtors advertised like car dealerships, they might say “this house can be yours with just 300 easy payments.” They may want to re-think the wording, but the point is your mortgage payment is critical to home affordability. Although some factors affecting your payment are out of your control, others are not.

For example, if you can save a down payment of at least 20% of the purchase price of your home, you can avoid the requirement for mortgage default insurance which adds another chunk of money onto your mortgage payment each month.

Another deciding factor when shopping for mortgages is your credit score. The better your credit score, the more likely it is that lenders with lower interest rates will want to lend you money. The better your lender, the more money you save on your mortgage. It’s important to check your credit report before beginning the mortgage process to ensure there are no errors and to resolve any outstanding credit issues. If you haven’t checked your credit score, no fear – your mortgage professional or lender will run a check for you when you are shopping for a mortgage rate.

Those are just some of the many considerations you should take when it comes to getting a mortgage. For more information, it’s always a good idea to talk to a mortgage specialist, or, if you want to make the mortgage qualification process easy, fast, and convenient, check with us today and get started!