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10/1/08

Five things to Keep in Mind in Mortgage Financing


Getting the right mortgage is much more
than just getting a loan, because it has an
impact on wealth building, retirement
and other strategies in personal finance.
Here are five critical things prospective
homebuyers need to know about getting
a mortgage:
1. Make a down payment – More
favorable loan terms are available to
consumerswho can put at least 5%down.
2. Be smart when shopping for interest
rates – A higher interest rate may not
include fees, and a lower rate may
include fees that elevate the actual
financing cost.
3. Consider paying more for your house
– Instead of negotiating a reduction in the
sale price, ask the seller to pay for the
costs to “buy down” the interest rate on
the loan. This can substantially reduce the
monthly payment, saving cash flow in
the short run and increasing your
principal balance over the long haul.
4. Improve debt-to-income ratio – The
higher your total outstanding debt
compared to your total income, the less
likely you are to be approved for a loan.
For the best loan terms, work to keep
your debt low.
5. Improve credit scores – Check your
credit report and get errors corrected, get
rid of liens, and resolve any late payment
issues for a quick and positive impact on
your credit score.

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