Buying your first home is a great hedge against inflation and a huge step toward financial independence. Before contacting a realtor, save money now so you have enough for a down payment. Set aside ten percent each month, and you’ll have a sizable amount that cuts down on what you owe and makes it easier to pay off that mortgage. That way you have security heading into retirement.
The next step is applying for a mortgage. A great mortgage rate helps you own your home debt-free faster. Lower payments mean you can pay extra on that mortgage each month and pay it off early. So take these steps to help you find the best rate possible.
Decide on the Type of Mortgage You Want
According to Kevin Cohee, most lending institutions typically offer you either a fixed-rate or an adjustable-rate mortgage. The one that works best for you depends on your circumstances. With a loan set at a fixed rate, you pay the same amount each month throughout the life of the loan. If you’re looking for stability, a fixed rate is the way to go.
With an adjustable rate, however, your payments stay the same from between one to ten years, and then the rate will either go up or down depending on the current interest rate. If the interest rates are high, then you may want an adjustable-rate mortgage in the hopes that rates will drop by the time the fixed period ends.
Shop Around for the Best Rate
Your bank is a great place to start looking for your home loan but don’t stop there. Look online as well. There is a wide range of lending institutions that can provide you with the perfect mortgage for your big purchase.
See if You Qualify for Down Payment Assistance
Depending on where you live, the government offers help for all kinds of people, including teachers, first responders, veterans, and first-time homebuyers. If you’re in that group, you could qualify for help with your down payment as well as lower interest rates and tax breaks.
If you’re low-income, you might also qualify for help from a community development financial institution.
Buying a new home and taking out that big mortgage can seem intimidating, but doing research now and shopping around for the best mortgage rate will ensure you have the most affordable payment so that you can own your home outright in the shortest amount of time.