Buying an apartment seems to be something unreal, because now there are few who have enough savings for this. House mortgage loan can solve the problem, especially since there are a lot of offers on the mortgage market, and there are plenty to choose from. What conditions should be paid attention to and what should be considered when you want to get bad credit mortgage loans?
Commissions for online home mortgage loans
Some offers look very attractive if they do not include any commissions. In fact, the bank can charge a fee for reviewing the application, which is about 1% of the loan amount, the loan issuance fee – another 1%. So, just getting a loan will cost a considerable amount, and yet there is still repayment … Therefore, before taking a loan for housing, you need to carefully compare the offers and give an advantage to one that does not have any fees or at least provides for them lower percentage.
Percent: current mortgage loan rates
It would seem that you should choose lower home mortgage loan rates because the lower the rate, the smaller the amount of payments. Mortgage loan rates today can be extremely different with that which were 1 or 2 years ago. In principle, this is true, but this choice does not always make sense. For example, if you compare a loan with repayment in equal shares (annuity) and a loan with repayment according to the standard scheme, then in the first case the interest rate is usually lower. But at the same time, when repaying by annuity payments, the total amount of interest paid will be higher. In addition, the rate on loans for the purchase of housing under construction is usually higher than on loans for finished housing (so the bank insures its risks associated with new buildings). Therefore, when trying choosing lending program with best mortgage loan rates it cannot be a decisive factor.
As a rule best refinance home mortgage loans are repaid in two ways: standard and annuity. To say which scheme is better is impossible, because in each case, one or the other can be optimal. Therefore, you should consider the features of each. So, in case of annuity, monthly payments are smaller, it is always the same, which is convenient, but first the payments go towards repayment of interest, and then the principal debt. Consequently, the scheme is suitable for borrowers with low income, but not profitable for those who are going to repay the loan early.
The standard layout is different. The first months the amount of the monthly payment is quite large, but gradually it decreases. The main debt is repaid from the first month. This scheme is suitable for those who want to repay the loan ahead of schedule, but not everyone will be able to pay large amounts at the initial stage. As for the total costs, the standard scheme is more profitable annuity, because with the latter, the total amount of interest is much higher.
Property insurance and valuation
As you know, usually banks require that property insurance is carried out by an insurance company accredited by them. Sometimes the same applies to expert assessment of real estate. Thus, the borrower can not cooperate with other companies, even if they have more favorable rates. However, the cost of services of partners of the bank can be found even before contacting the bank (for example, on the company’s website or the bank itself), which makes it possible to pre-evaluate the overall picture.
Almost all mortgage loan companies issuing a mortgage loan, require a down payment of at least 10-30% (depending on the requirements of a particular financial institution). On the one hand, it is more profitable for a borrower to immediately deposit most of the money in order to pay less on the loan later. On the other hand, funds for the down payment still need to be found. Of course, if there are no savings, you can take a consumer loan and pay it as a down payment, but two loans will have to be paid this way. There is one more thing – some banks practice loan programs in which the higher the down payment, the lower the interest rate. Therefore, it is worth comparing the ratio of the down payment, the interest rate and the loan term for different programs.
It is clear that the longer the loan term, the smaller the amount of the monthly payment. But at the same time, loans with shorter terms, as a rule, are provided with a lower interest rate. Here again, you need to take into account other indicators of the loan. In general, a mortgage is issued for a period of up to 30 years, but in reality banks prefer to issue loans for 10-15 years. This is due to the inability to foresee the economic situation and risks. What will happen in 5, 10, 15 years, the borrower will not be able to guess, therefore, probably, it is better to take a loan for a shorter period, but, of course, if there is such an opportunity.