5 Best Tips to Lower Home Buying Cost for the First Time

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Home Buying when you are a first-time buyer seems so intimidating. Imagine going through the process all alone, and managing all the finances can leave you stressed. If you make the wrong choices initially, you may end up spending more than required on your first home purchase. Therefore, it becomes exceedingly important to take advice from an experienced person. 

No one is better than a mortgage broker with immense experience in this field. He can help you cut the extra cost and lower your home buying cost.

Besides, here are a few tips that can help you a lower cost on your first home purchase-

1) Focus on your credit card score-

If you really want to reduce the rate of interest, then it is beneficial to improve your credit card score. People are asked to keep their credit card score high because being a borrower and having a high credit score can make you repay your loan with ease. 

As a result, you can expect your lender to keep a minimum interest rate of the money they lend, creating a bond of trust. So, if you are thinking of starting with your home buying process, then look into your credit card or look into improving it.

Just to help you with it, a score above 700 is considered to be the best for getting lower rates.

2) Finding the right mortgage broker- 

Every mortgage company or broker offers different mortgage rates and deals depending upon the network of lenders and borrowers they have. So, it entirely depends upon you to do thorough research before you hire a broker or a mortgage company for your first home.

The best way to do so is to compare the quotation of various mortgage brokers or lenders and see which one goes best with your plan.

3) Negotiate where possible-

If you plan to save money for the closing costs and the upfront, you can negotiate your mortgage fees. You can keep a limit on the lender fees and ask your lender to cut out a certain percentage of the lender’s fees. Even lenders are aware of it and can negotiate if they are interested in your deal.

4) Chose the locality carefully-

The location has a massive role in deciding the price since home prices diverge from location to location. Posh and famous areas will have high rates and demands, whereas moderate ones may come within your range. Price range usually depends on the factors like:

  • Security in the location
  • Whether the marketplace and public transport are near?
  • Type of neighbourhood and people

All these things have a great impact on the cost of the home you are looking to purchase.

5) Choose to close at the end of the month-

When you pay for your closing costs, there are additional payments that you tend to make, known as prepaid item costs, apart from your down payment. Hence, these payments cover most of your payments, including property taxes, renovation costs, mortgage costs, etc.

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Top 4 tips to determine how much mortgage you can actually afford

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Investing in house property is a significant step in one’s life. You’ll be staying at the place for many years and may even pass it down. One surely puts in a lot of time to see and select the house, but mortgage plays a big part in it too. You need first to determine the mortgage you can actually afford. You cannot just get a big loan with no regular source of income to pay it off. It will harm your credit scores and also the ownership right to the property.

It is a tricky thing to calculate your mortgage affordability. You need to count in the future income increases or decreases, inflation, and many other factors. Apart from that, there would also be changes in the market. It is prudent to hire a reputed mortgage broker if you wish to skip all this trouble. However, when doing it all yourself, you need to get in some work. It will help you get to a limit that is sufficient for you to invest and affordable to pay off in the future as well. This should be your first step before you start looking for houses. Only then would you be able to list down the ones that fit in the budget. Here are the top 4 tips for arriving at a mortgage figure:

Determine your monthly expenses and income

You need to have a precise number that you can spare every month for the payment. It should not lead you to lose out on any of the crucial expenses. Calculate your every cost and subtract it from the total income you earn. You’ll arrive at the money that you may save or use in paying off the mortgage.

Your monthly installment should ideally be less than this amount. It would leave room for savings.

Get an expert

You might hire a broker to get a good mortgage deal. They can also help you determine your affordability of the mortgage amount. You can also take up the help of a financial expert. Either way, it will leave the works in the hands of a professional. They would keep your income and expenses in mind and also the other market-related factors. Also, mortgage brokers can help you get deals that you can afford easily.

Use a mortgage calculator.

There are online tools that can give you all the details about your affordability position. You would just need to fill up the details about your income, down payment, etc., and wait for the results. It is another choice to arrive at a number. However, you should not trust these results blindly and make efforts on your own as well.

Use a mortgage calculator now to get the number.

Check your assets and their market values.

If you have any property or precious assets that can make you money, check out their current value. You can sell them to put down a larger down payment and save up on the interest money. Also, you can afford a larger mortgage if you have assets to back up that amount. It means that you can look for better properties and fulfill your dreams of those luxurious houses.

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Benefits of Second Mortgage

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Does the word second mortgage scare you? Does it sound like you are going into a loss? Do you often hear myths and rumors like a second mortgage means you will be paying debt your entire life?

                                    Well, we all often hear such rumors and myths when we are planning to mortgage the apartment or the building. Many of us are scared hearing the word loss without actually knowing what mortgaging means. Why don’t we find out what the fuss is all about and crack some myth busters!

            What is a second mortgage and how can you benefit from it? -These should be the basic questions you ask yourself or try to find out rather than getting upset about what others have to comment on it.

What is a second mortgage?

                                    Basically, a second mortgage is a loan where your home stays as a collateral. You borrow the loan against the home’s equity. Second mortgages are often done to pay off your debt, renovate your home, make some major investments. The second mortgages are liens secured by your home, although failure to pay back your debt will result in the lender taking your home to fulfill the debt payment, which is the baseline condition for any kind of loan you borrow.

Types of Mortgages

  1. The loan you receive on behalf of your home’s equity to use accordingly. The payback is dependent on a fixed rate of interest over 5 to 20+ years based on the amount decided mutually.
  2. The loan that you take on credit. Like a credit card, the amount you use during a set interval has to be paid back with interest. HELOC is a home equity line of credit. You can borrow upto a limit, pay back and can continue borrowing thereafter.

Benefits of second mortgage

  1. The mortgage rates are comparatively lower than the interest credits and personal loans provided now-a-days. One can use the mortgaged amount to make a bug purchase, put off a debt, and can put the fund into any virtual investment if needed.
  2. The loan that you borrow with your second mortgage can be paid back with a fixed rate of interest. You can cash out the amount you have borrowed and can put into home improvements, payment of medical bills, college tuition fee payment, major home repairs; these payments can be written off while paying tax with various mortgage tax deduction schemes and conditions.
  3. The time to pay your second mortgage loan is comparatively higher; one can pay the amount as long as 30 years.

 You will be a good candidate to get a second mortgage

  1. Your payment history should not have any recently missed payment records.
  2. It is advisable not to exceed the debt-to-income ratio by more than 40%-43%.
  3. The borrower needs to have at least 15-20% equity of the home he/she would mortgage. The maximum amount one can borrow is 85% of the existing equity.
  4. Credit score plays a vital role for being qualified for the second mortgage. A good credit score increases the chances of getting the second mortgage contract.

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Keep these things in mind during your mortgage renewal

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A mortgage is a critical step towards owning your own home, and you need to make sure that you get the best terms that suit your needs and financial goals. While it is difficult to get your application approved and going through all the other requirements, you still need to ensure that the terms of the contract are a good deal for you. You surely wouldn’t want to end up in a situation where your lender might be ripping you off, and because of the contract, there isn’t much that you can do. This makes it essential to check the agreement, terms, and other details before finalizing your deal. Hiring a reputed mortgage broker would be an excellent choice to ensure that you get a great deal and terms that offer you financial stability.

Mortgage renewal is the process where your current term ends, and you either apply for a renewal or pay off your mortgage. This is also an opportunity to renegotiate the terms like the length, installments, or interest rate. A renewal can help you get a much better deal, but you might end up with a costlier agreement if you are not careful. It is essential to do your research and keep in mind the variables to get the best deal possible.

Your current financial position

Your finances and ability to pay back your mortgage and the installment amount are significant factors in your mortgage renewal. Also, if you have some future goals and want to make investments, you might want to pay off your loan as soon as possible.

Also, if your property value has increased, you would be in a position to renegotiate for a better value on your mortgage deal.

Researching the rates

The interest rates are constantly fluctuating according to the economic market and other factors affecting a specific country’s financial health. Researching the current market rates of the market should be your priority. It will help you procure the deal if the market rates are lower in the market and benefit the renewal.

Find a broker.

A mortgage broker can find the best deals on the market and get the best one that fits your needs. Mortgage brokers can find you deals that might not be possible for you to find individually.

They would also help you make the best of your credit scores and find the deals you qualify for.

Consider another lender

Start negotiating with your lender early to decide whether they are willing to offer you a good deal; if not, you should consider switching your lenders. There are many lenders, and finding the best one requires research and looking for the one that fits your preferences.

Also, switching your lender would be a great choice if you are not satisfied with your current lender’s services and are looking for someone with better customer service.

Keeping the installment amount the same

If you are able to procure a lower interest rate, keeping the installment amount the same would help you pay off the mortgage sooner and save all that money you’ll be paying as the interest money.

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Why should you go for Mortgage Loans?

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Life is very unpredictable. You can not even think about what emergency you might get stuck in the very next moment. Sometimes, a person requires immediate funds but cannot figure out what he should do to fulfill the requirement. Here comes the concept of Mortgage Loans. A mortgage loan is a credit taken out against the property you have. The loan is given as some percentage of the market value of the property. Hence you can arrange your funds easily by just keeping away the property in safe hands.

Another thing where Mortgage Loans help is while buying a house. There are hundreds of moneylenders offering a whole range of different types of mortgages for purchasing a home. This is how a mortgage loan helps in various good or bad situations of life. But what are the benefits of acquiring mortgage loans for such things as there are many other options available? Let’s dive into those points and see how they are beneficial over others.

  • Easy and Secure

No doubt you mortgage your property, but it is always secure as you continue to remain your property’s legal owner while you use the funds from the loan to fulfill your needs. This means you do not have to bequeath your ownership of the property and can get the loan. Hence you do not have to worry about losing your property. Apart from being secure, it is an easy process to get a mortgage loan. Mortgage loans are quickly approved since they are secured loans. Lenders are more than willing to provide these loans. Therefore, you won’t find it troublesome to get a property loan. Considering both these points, you will be in a much better position to weather economic storms with a mortgage than without, assuming you have put money aside.

  • Flexible Interest Options

While getting a mortgage loan, you get multiple choices for selecting the type of interest. You can go for the fixed interest rate. This interest rate remains equivalent for the entire loan tenure. You may be allowed to opt for a fixed interest rate if you opt for shorter tenures. If you want to go for a longer tenure, a fixed interest rate won’t benefit you. For larger terms, you have another option available at your desk. You can go for a 25-year period. This term is not fixed or decided as such. People consider it as retirement age is going up. This shows how you can adjust your interest depending upon longer or shorter tenures. Another rate concept in a mortgage loan is the floating interest rate. This interest rate is adjusted according to prevailing market rates, and you can not predict what the rate will be in the future. This is a rate of interest that can change periodically, and it is directly linked to the MCLR.

  • More economical interest

The interest rates on Mortgage Loans are much less than any other type of loan, as the loan is secured in return for your property. This is the reason why the interest you pay on a mortgage loan is much lower than that of a personal loan. Mortgage loan interest rates generally range between 12% and 15%, while in personal loans, the interest rate ranges are 15% to 25%. The interest paid on your home mortgage is deductible, up to certain limits, on your tax return. Being able to save your money this way makes paying off your mortgage easier overall. This is the primary reason for an individual to choose a secured loan over an unsecured loan. As mortgage loans have an option for the longer term, the EMI cost also reduces. The longer the tenure, the lower will be the EMI. One can repay the loan in affordable monthly payments. Hence it becomes relatively easy for people who can not afford higher EMI’s.

Apart from all these, there are many other benefits of acquiring a loan through a mortgage. A mortgage loan can be customized to befit your requirements. Hence mortgage loans should be a priority for many personal requirements like funding a medical emergency, paying for your children’s higher education, paying for your children’s wedding, business expansion, etc. There are many trusted online platforms from where you can get a mortgage loan easily and is even secure. So why not go for a Mortgage loan if it comes with so many advantages?

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Different Types of Mortgages

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  • Open Mortgage: Open mortgage is the one where you can make large payments or pay off the entire mortgage without any penalty. It is the kind of mortgage that offers maximum flexibility. Because this mortgage provides the flexibility of paying off part or entire mortgage before the term is complete, the homeowners are willing to accept the fluctuations in the interest rate.
  • Closed Mortgage: Closed mortgage is one that has a pre-determined interest rate, over a predetermined period of time. However, in the case of a closed mortgage, the buyer will have to pay the penalty if he/she fully pays the loan back before the tenure has ended. In the case of a closed mortgage, the buyer has the choice of selecting a fixed rate or variable/adjustable rate. One can select any time of the rate depending on their needs and preferences. It should be noted that interest in the case of a closed mortgage is lower than the open mortgage. In the case of a closed mortgage, sometimes the lenders allow the loan owners to make the lump sum payment of 10%,15%, 20% of the original amount, once in a year, without charging any penalty. This payment becomes part of paying down the principal amount.
  • Convertible Mortgage: As the name suggests, it is the kind of mortgage that can be converted during its tenure. This kind of mortgage comes with an agreement that allows the loan owners to change the type of the mortgage they are holding during its tenure, for instance, if you have an open mortgage and wishes to change it to a closed mortgage at some point of the tenure, opting for a convertible mortgage is the right choice. It also offers lower interest rates as compared to the open mortgage and has the option of switching to the closed mortgage. It should be kept in mind that the loan owner can also convert variable rate mortgage to fixed-rate mortgage, even when the loan owner has originally opted for the variable rate mortgage. However, the conversion should always take place before the term ends.
  • Hybrid Mortgage:  Hybrid Mortgage in which there is more than one type of mortgage. As the name suggests it is the combination of more than one type of mortgages, contained in a single registration. This mortgage can include a fixed-rate portion, variable-rate portion, a line of credit portion, or a combination of any of these types. Each lender gives on his own a unique name to such mortgages.
  • Reserve Mortgage: this is the type of mortgage which allows the homeowners of 55 years or plus to convert their home equity into a lump-sum payment or monthly cash payment. This is generally done to secure their living expenses. In the case of a reserve mortgage, when the homeowner no longer wants to occupy their property as their primary residence, or upon the death of the borrower, then the balance which is due is settled by selling off the property.

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Which Debts Should You Pay Off First?

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Debts can start weighing down on you after a period of time, causing immense anxiety and stress as well as affecting your financial status. If you have to pay off a certain amount of debt, it is a good idea to make a balanced plan to approach the pay off. If you debt repayment is haphazard and erratic, it will simply cause more mental and financial strain on you.

There is not set method according to which you should be repaying your debts, since it would largely depend on the source and kind of income as well as factors such as spending capacity. However, it is important to plan your payoff since the sooner you repay your debts, the better your finances will be. Here are some factors that you can take into consideration while repaying your debts, but first, it is important to see whether you should pay your smallest debts first or your high-interest debts first.

High-interest debts.

A lot of people consider that paying off the high-interest debts first is a better choice, since the more you delay, the more interest you have to pay, so essentially if you pay them off faster, you will save more money. The interest saved can be used to pay off the other debts.

This explanation is fairly logical; however, it may feel like you are not progressing anywhere with your debt repayment since high-interest debts are usually much larger and take very long to be paid off.

Smaller low-interest debts.

Some people think that paying off these debts faster can help you reduce the total debt you are under in a much faster way. You will be thinking that you are making considerable progress into going debt-free, once your smaller debts are paid off, and you can focus on the larger ones.

The only problem with this method is, if you also have a high-interest debt with this, then you would have to pay a larger interest amount on that for much longer.

The factors to take into account while deciding which method to follow can be:

  1. Your spending habits.

This directly correlates with the amount of money you will be able to save, and since you will be paying your debt out of your savings, it is very important to consider spending habits. If you have a lot of debt to pay off, it is advised to keep your credit card spending to a minimum, since you do not want to overspend and pay for your outstanding credit later on as well.

  • Tax breaks.

Tax breaks are available on low-interest loans, such as student debts, which provide a certain tax break on the amount on interest paid. These should definitely be taken into consideration when you are paying off your student loans and credit card debts, in particular.

  • The urgency of your debt.

This should always be taken into consideration when paying off debts. If you have a good number of years on your debt, you can rest assured that your monthly instalments will cover you. However, if you have payday loans, you should absolutely try to cover those first before moving on to the others.

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How Often Should You Review Your Home Loan?

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A home loan is a long term engagement, and cannot be taken lightly by any means. Most home loans last for a period of fifteen to twenty years, and a lot can happen during this time. Your home loan should be reviewed quite regularly since the future is always uncertain and you should know how the status of your loan is progressing. You loan and your needs should be well-aligned with each other, irrespective of how your financial situation changes during the time.

A number of things can affect your financial situation- the status of your job, changing government policies, changes in rates of interest, the economic situation of your country and so on. This is why you should always be updated regarding the outstanding amount on your home loan, so that you can take a decision regarding what your home loan would require- a balance transfer, top-up or foreclosure. Therefore, ideally, it is advised to review your home loan every four to five years.

  • Balance transfer:

This is a common method followed by many people with outstanding home loans. Over the years, it may be possible that you find financiers who provide better interest rates and more attractive options than your initial financier. In this situation, you can always transfer the loan from one agency to another, provided you have a history of timely payments and a good credit score. You simply need to submit some documents and a no-objection certificate along with your payment history to the new agency to enjoy the new benefits.

  • Foreclosure:

As the name suggests, this implies an earlier closure of your outstanding amount or paying a significant part to lower the EMI. This can be a good option of your financial condition improves in a stable way, and then you would no longer need to worry about the status of your home loan. You would need to submit the required documents along with an application for part payment or foreclosure, and of course, the loan sanctions paper. Once you close a home loan, always remember to take the original property papers from the financier.

  • Top-up:

As the name suggests, this essentially denotes an additional amount that can be availed in case the previous loan does not cover all your requirements. To avail the top-up loan facility, you would need to submit the required documents along with proof of income and employment and all the previous chain documents. Since this is a personal loan, the interest charged is usually higher than your earlier home loan.

When you review your home loan status periodically, you are up-to-date on how you should proceed with paying the outstanding amount depending on your present financial situation. You can then choose from among the options mentioned above and make your decision.

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Things to Do Now to Buy Home in Future

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Buying a new home is a major financial step in one’s life. There are a lot of formalities included in the home buying process that one has to complete to own a home. This is the reason why it is suggested to start preparing yourself long before stepping in the home buying process. Start searching online about all the legal formalities included in the process and take the advice of people who have recently bought a new home.

Want to know what things you need to do now to become a homeowner in the coming year? Then read the tips explained below.

Start by saving – If you are serious about buying a new home sometime in future, then it is crucial to start saving now. Indulge in good savings plan early. Set budget for your daily expenses and don’t expend money on unwanted things. If you follow your savings plans strictly and build up a good deposit, then you will not have to borrow more from the mortgage lender. Lesser you will borrow, lesser will be the mortgage repayment.

Get rid of debt if any – This is one of the most important steps towards preparing yourself for purchasing dream home in future. Work on paying down your debt as it will help in improving your credit score and you may get a mortgage at a low-interest rate. Moreover, by paying down the debts, you will get rid of extra expenditures and will not feel stressed while buying a home.

Calculate how much you can afford – It is vital to understand how much you can spend on a new home. Also, by calculating your budget, you will determine how much more you need to save to buy the house of dreams in future. It is highly recommended not to exceed your budget while buying a home. Otherwise, you will have to face unwanted stress as surpassing the set budget you may not be able to meet your day to day expenses. Remember, you need to plan things in such a way that home buying does not bring worries in your life; instead, it should fill your life with excitement.

Improve your credit score – Start improving your credit score now if you want to buy a home the next year. Pay all your bills and outstanding payments to have a good credit score. Doing so is important because your credit score is the first thing that mortgage lenders check before approving any mortgage application.

Contact a mortgage broker – If you have a good credit score, the get yourself pre-approved for a loan before you see any home. Getting yourself pre-approved you will have a fair idea about what kind and size of a property can you afford.

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Buy House in Canada – Tips by a Pro

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Are you ready to buy a house in Canada? If yes, then this post is exclusively for you.

Who doesn’t want to gift their family a place that they call their own? Everyone does! For this reason, they go the extra mile and save as much as they can to buy a house of dreams one day. But, are you aware of what is involved in the home buying process? Where home buying fills you with excitement, the task can be overwhelming too. As a lot of steps and formalities are included in the process, you can get stressed a lot many times. But, you can reduce the stress level if you spend some time in understanding how to own a house in Canada.

So, let us discuss some tips to buy a house in Canada.

Save, save and save – The first and the most logical step towards buying a house is to save as much money as you can. It is because more the money you will have for the down payment, chances of getting a residential mortgage at a lower interest rate will increase. So, if you are planning to buy a house in the near future, then start saving and stop expending money unnecessarily.

Set your budget – Budget is a very crucial factor that one should not overlook while buying a new house. A realistic budget is something that plays a significant role in deciding what will be the size of your home and what all luxuries will be included in it. Make sure to analyze your income and daily expenses while making the budget.

Check mortgage options available – As there are several mortgage options available, you have to determine which mortgage type is suitable for you. In order to learn about the mortgage, surf on the internet and take the help of mortgage experts. Also, try to get pre-approved for a mortgage before starting your search for a house.

Make a list of features you need in your home – When it comes to buying a new house, you must know your requirements. Make a list of things and features that you need in your home. Also, talk to your family members while making a list as a task done in collaboration can yield better results. Look at your present place, see what important things it lacks and plan accordingly.

Hire realtor – Realtor is the most crucial person in your home buying process. As he has access to various homes available in the city, he can help you in buying the house of your dreams. Make sure to perform background checks and read online reviews before selecting any realtor for yourself. If you wish to purchase a home in an area of your choice, select the realtor who has knowledge about that particular area.

Make an offer – This is the most important step in the home buying process. Also, if you want to negotiate, then go ahead, don’t hesitate in doing so.  

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