This is a huge step in everyone’s lives. Getting your first home and applying for a home loan for the first time. Even if this is exciting, it can be really scary as well. This is a huge sum of money that you are going to borrow and that you need to repay over the next 20 to 30 years.
These are the three most important things you need to remember when you are getting your first home loan.
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There is a huge difference between what you qualify for and what you can afford
Just because you qualify for a specific amount, it doesn’t mean that you should use the whole amount to buy your home. You can still not afford the mortgage amount that the lender approved for you.
This is why you need to make sure that you have done your budget and you know how much you have to spend in premiums each month. You should never use more money than what you can afford.
Know the different types of home loans you can apply for
There are different types of home loans or mortgage loans that you can apply for. The most common type of loans is the fixed-interest loan and the flexible interest loan.
It’s important to make sure that you know the difference between these two loans. The last thing that you want is to apply for the wrong type of mortgage loan. Keep in mind that you are going to repay the loan for years, and you don’t want to repay the wrong type of loan for so many years.
Having your 20% down payment ready
Yes, you need to have at least a 20% down payment ready before you are applying for your home loan. Some lenders don’t require the down payment, but we don’t recommend have a down payment. The more money you have for a down payment, the less your premiums are going to be. And, it will show that you are trustworthy and able to repay your home loan.
If you don’t have a 20% down payment, you can have 10% as well, as long as you just have a down payment to put down on your home.
If you are new to getting a home loan, you need to remember these three key things. The different types of home loans, and you need to have a down payment. The last thing to remember is that just because you qualify for a certain amount, doesn’t mean that you should use all of the money. You need to know what you can afford.
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