3 Questions To Ask When Trying To Get A Home Loan
Making the decision to purchase a home is huge. You are stepping away from renting and into purchasing the home of your dreams. Home ownership comes with a lot of different responsibilities. However, getting a home loan isn't always as simple as you might think. There are a lot of specifics that come into play to make sure you get the loan you need. As you try to get a home loan, there are a few questions you can ask the lender to make sure you have an understanding of what you are getting yourself into.
Is the interest rate fixed or variable?
One thing you need to know is whether you are getting a variable or fixed interest rate. Variable rates can make your payments change from one month to the next, so knowing this ahead of time is important. Otherwise, you could be thinking that you are going to pay one amount only to be hit with a larger amount than planned. Fixed rates mean your payment is going to stay the same month after month. While a variable rate could work to your advantage when interest rates drop, that isn't always the case.
What are the payment terms?
You also need to know what the payment terms are. Is your loan a 30-year fixed rate mortgage or are you dealing with a 15-year variable rate mortgage? All of these things are going to determine how much you are going to pay each month and for how long. You also need to know if there is a balloon payment at the end of the loan. You don't want to get a bill for thousands of dollars out of the blue when you are thinking that everything is fine.
Are there any pre-payment penalties?
You could get to a point in your life where you want to pay extra on your loan to try and get it paid off early. You need to know that you can do just that without having to worry about being charged any crazy fees or penalties for doing so. Some lenders don't care if you pay the loan off early, while others want you to continue making payments for a specified amount of years. Each lender is different, so you want to make sure you know what your individual lender's requirements are.
By asking the questions above, you can make sure you know what you are stepping into beforehand. To learn more, contact a company like Dynamic Mortgage Concepts Inc.