If you are currently renting a home and are considering buying a home in the near future keep on reading.
If you are new to the area and think you may want to rent before buying a home you may want to consider some of the following factors:
1. If you are not financially sound do not buy home yet.
Despite all the great loan opportunities available, get your finances and other loans under control before purchasing your home. Lenders often base the interest rate and terms of your Mortgage on your credit score and history.
To get the best loan, you will need to make sure that you have a deposit and a clean credit report.
2. Make sure you are ready to commit to maintaining a home.
No matter how new or in what great condition a home is in when you buy it, the home will require maintenance.
You need to understand that your home is a financial investment.
It will be worth more if you can commit the time and money needed to keep it in good shape and updated while you live in it.
3. Renting is an expense while home ownership is an investment.
Hire a Realtor, buy a home in the right location, reside in the home for a decent amount of time, and take good care of the home. When you sell, you should realize a gain on your investment.
4. Owning a home gives you more flexibility in your lifestyle.
Home ownership allows you to decorate landscape, upgrade or change the home to suit your lifestyle and tastes. As a renter, it doesn't make sense to spend money redecorating someone else's home.
5. Are you relocating to the area?
If you are new to the area and want to live in an apartment for a while before you buy, be careful where you rent.
When renting for six months to a year, you will probably become attached to that area. You will become comfortable with the stores, Dr. offices, services, and general location.
However, when it comes time to buy, many people become reluctant to leave that area, yet the home that they want to buy does not exist anywhere near the apartment.
This can create a "real estate trap." Hire an estate agent
Have them educate you on the different areas that may suit your lifestyle and on the neighborhoods that may interest you when you are ready to buy.
For more information about home loans, visit: http://www.gpfmortgage.co.za
Monday, August 24, 2009
Fixed & Variable Interest Rates
When choosing a mortgage loan most people focus on the interest rate more than on any other factor of the loan.
The lowest interest rate, however, does not always mean you pay less money.
Hidden fees, rising interest rates or prepayment penalties can cost you a fortune over the term of the loan.
Understanding when to recognize a bad Mortgage loan may save you a lot of money in the long run.
Variable Rate Mortgages (VRMs)
Variable Rate Mortgages make buying a home easier, especially for first-time home buyers, but you have to understand what you are agreeing to.
Most VRMs start out with a low introductory interest rate that can climb as interest rates go up.
Unless you are prepared to pay a higher payment later on this type of Mortgage can turn out to be dangerous for you.
It is especially difficult for those who can barely afford the loan to begin with.
Prepayment penalty
Paying off your Mortgage loan early can save you thousands of rands in interest but not if
there is a prepayment penalty clause in your contract.
Make sure there is no such clause before you sign your loan papers otherwise the bank can charge you enormous fees for paying off your loan.
Most people don't think they can ever pay off a Mortgage loan early at the onset of the loan but your circumstances could change. It would be a shame to be penalized for trying to save yourself some money.
Lower interest rates
If you are being offered an extremely low interest rate then you should investigate why.
Ask for a quote so you can see what the closing costs (initiation & legal fees, insurance etc.) will be.
Many times a lender will add exorbitant closing fees to a loan to make up for the lower interest rate.
High interest rates
If you know your credit score is good and you are still being quoted higher than normal interest rates then don't take the first loan that comes your way.
Shop around. Do your homework and make sure you know what the current prime rate is and the rates of several lenders.
A home Mortgage loan is a very long commitment and you don't want to make that commitment with the wrong lender...
The lowest interest rate, however, does not always mean you pay less money.
Hidden fees, rising interest rates or prepayment penalties can cost you a fortune over the term of the loan.
Understanding when to recognize a bad Mortgage loan may save you a lot of money in the long run.
Variable Rate Mortgages (VRMs)
Variable Rate Mortgages make buying a home easier, especially for first-time home buyers, but you have to understand what you are agreeing to.
Most VRMs start out with a low introductory interest rate that can climb as interest rates go up.
Unless you are prepared to pay a higher payment later on this type of Mortgage can turn out to be dangerous for you.
It is especially difficult for those who can barely afford the loan to begin with.
Prepayment penalty
Paying off your Mortgage loan early can save you thousands of rands in interest but not if
there is a prepayment penalty clause in your contract.
Make sure there is no such clause before you sign your loan papers otherwise the bank can charge you enormous fees for paying off your loan.
Most people don't think they can ever pay off a Mortgage loan early at the onset of the loan but your circumstances could change. It would be a shame to be penalized for trying to save yourself some money.
Lower interest rates
If you are being offered an extremely low interest rate then you should investigate why.
Ask for a quote so you can see what the closing costs (initiation & legal fees, insurance etc.) will be.
Many times a lender will add exorbitant closing fees to a loan to make up for the lower interest rate.
High interest rates
If you know your credit score is good and you are still being quoted higher than normal interest rates then don't take the first loan that comes your way.
Shop around. Do your homework and make sure you know what the current prime rate is and the rates of several lenders.
A home Mortgage loan is a very long commitment and you don't want to make that commitment with the wrong lender...
Junk Fees to be aware of!
Almost every loan is going to have associated with it fees for insurance, valuation, etc. Most of these fees are commonly required amongst all lenders and they must give you a list of their costs associated with a mortgage.
Despite the fact that the costs are disclosed, some lenders may include extraordinary "junk" fees in their costs that an unwary buyer may not recognize as an extra fee.
At the time of a loan application lenders are required to give you a written closing cost estimate.
First, determine if your rate has been loaded. Some lenders advertise artificially low rates to attract customers but load up on fees to compensate for a lower rate.
A tip off to a lender that charges hidden fees would be a lender who advertises interest rates that are appreciably lower than the competition. Interest rates are very competitive and shopping for the very best rate may in fact work to your disadvantage.
Differences in rates of 1/8th or 1/4th of a percent result in very little difference in a payment and may be offset by poor service and added hidden fees.
Your only defense against being overcharge is knowledge...
Now, in 2 days time, I'm going to send you a very special video called:
“9 Critical Questions You Must Ask Before Applying For A Mortgage!”
This video will show you exactly what questions you must ask to avoid being taken advantage of and to make sure you get the best home loan deal for yourself.
Despite the fact that the costs are disclosed, some lenders may include extraordinary "junk" fees in their costs that an unwary buyer may not recognize as an extra fee.
At the time of a loan application lenders are required to give you a written closing cost estimate.
First, determine if your rate has been loaded. Some lenders advertise artificially low rates to attract customers but load up on fees to compensate for a lower rate.
A tip off to a lender that charges hidden fees would be a lender who advertises interest rates that are appreciably lower than the competition. Interest rates are very competitive and shopping for the very best rate may in fact work to your disadvantage.
Differences in rates of 1/8th or 1/4th of a percent result in very little difference in a payment and may be offset by poor service and added hidden fees.
Your only defense against being overcharge is knowledge...
Now, in 2 days time, I'm going to send you a very special video called:
“9 Critical Questions You Must Ask Before Applying For A Mortgage!”
This video will show you exactly what questions you must ask to avoid being taken advantage of and to make sure you get the best home loan deal for yourself.
The Truth about the Home Loan Industry
For the past few weeks I've been working on a very SPECIAL
REPORT which I believe is the TRUTH about what's been going
on in the home loan industry.
Is it controversial? YES
Is it TRUE? YES
I've been in the mortgage industry and know this business
inside out. You can learn from someone like me who has been
Involved in lending millions of rands in home loans and has
seen most of the tricks unscrupulous lenders use to get your
business.
One of the biggest mistakes people make when getting a
mortgage is going to their bank and taking the rate the bank
gives them. Even though the bank often gives a discount off
the posted rate, most of the time they can qualify for a
much better rate.
People think that because they are getting a discount, they
cannot qualify for a lower rate. In most cases, the rates
given by the banks are not the best on the market.
Just think about this for one moment...
Banks don't care if you pay too much in fees. Nobody at the
bank is going to hold your hand and make sure you get the
best deal.
They want you to remain ignorant when it comes to shopping
for a home loan.
Why?
Because, it means extra profit for them. You will end up
paying more upfront fees and closing costs and ultimately a
higher monthly payment for the next 20 to 30 years.
Your only defense against being overcharged is knowledge...
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