subject: Best Home Loan Tips [print this page] Best Home Loan Tips Best Home Loan Tips
Buying a home can be an exciting time in your life, but can also become very frustrating, especially if this is your first time. There are a lot of variables to consider before actually making probably the biggest purchase of your life. There are different types of loans to compare, there are costs other than just the price of the home, and you need to consider how much you will be able to borrow.
Comparing the Different Types of Home Loans:
Standard Variable Rate Loan These offer you the most flexibility and number of options. With this type of loan, you are able to make extra payments to pay it down quicker, and you can split or fix it as well.
Basic Variable Rate Loan- These have a lower interest rate, but also a lot less options. Sometimes, though, you can pay to add on features that you need as you go.
Fixed Rate Loan This type of loan protects you from changing rates as the market goes up to prevent your payments from going up as well, but, you also don't benefit when the rates go down. If you want to make extra repayments on this type of loan or pay it off early, you will most likely be penalized and charged more money.
Combination Loans These loans give you a combination of variable and fixed loans. You will benefit when the market prices go down, and you are also protected when the rates go up.
A List of Expenses You Will Need to Remember:
Mortgage Application Fees Some lenders do not even charge this, but some can charge up to $600. Make sure you know before you get too far in the home buying process what your lender requires here.
Legal Fees It is possible to get a kit and do the legal paper work yourself, but it is long and detailed, and unless you are prepared for it, it is advisable to hire a conveyance or solicitor to handle all of this for you.
Inspections Even if this is not required for your home loan, a building inspection is a must do part of the home buying process. You can't know all there is about the house without one of these, and this could bring up important issues with the house you did not know existed. An inspection for pests and termites is also highly recommended.
Stamp Duty This is one of a number of government fees that may have to be paid at the time of purchasing a new home loan. These are generally paid before
or at the same time the house settles.
Something really important before buying a home is to have enough of a deposit saved up. This is important if you want to save money, because if you have saved up a deposit that is at least 20% of the purchase price of the home, you can avoid having to pay mortgage insurance. This insurance is designed to protect the lender in case you default on your loan. It does nothing to protect you and just becomes an additional cost.
You also want to keep in mind you and your family's future as you are purchasing a home. Make sure that when you are looking at what you can afford to make in monthly payments that it won't interfere with your family's needs. If you don't already, do you plan on having children? There are many future costs to consider, like saving for college. Take the time to carefully consider all options and plan your future out as best you can so you can comfortably make payments the whole life of your loan without defaulting on it or putting your family at risk.
