The 3 Important Items before Getting a House Loan
Posted by nikhil294 on September 15th, 2016
After 8 months of searching for a new home, you finally settled on a wonderful three bedroom condo with great views of the mountains. Your offer was accepted and now it is time to get the mortgage to pay for the property. Here is what you must consider before settling on a house loan.
If you have been pre-approved for a mortgage, which should be done before going into the negotiations on the property, then it is now a matter of locking in an interest rate that is acceptable in the long run. The mortgage application process can take as many as 90 days to complete. During that time, anything can happen including a change in the interest rates. So the first rule before locking in to a particular mortgage rate is following the trends in the economy and in particular low interest rates. You don't want to lock into a rate that appears excellent at the time you lock only to have it drop further and re-negotiate the points when it's time to close. Most lenders will drop the rate to the low interest rate if you ask them. But you need to be informed to do so.
The second important item before getting a house loan is to not put all of your eggs in one basket. You can pre-qualify for a home loan at more than one institution. Pre-qualifying does not commit you to anything other than the lender committing to you that you qualify for a particular amount of money based on your income. It is easy to work with two or even three different lenders to see who offers the best house loan financing. You don't commit to a loan until you have to pay money for the application and appraisal fee. So it is important not only to see who has the best mortgage rates but also who is willing to work harder for your business.
The last item maybe more important than the other two, depending on the time of year you planning to close on your new property. The interest on the mortgage that you will be paying for your primary residence in this new condo that you found with the great mountain views is tax deductible. So, how much of a tax benefit do you need for this year is a major consideration. For instance, if you are buying a home late in the year because you are expecting a raise next year, then you may want to hold off on the closing until next year taking advantage of the tax. So the important last thing to do is check with your accountant to see where you stand.
These are just some of the considerations that you should look into when deciding on a house loan. There are many other tricks and tactics to use, so as not to get you into a long-term dilemma.
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