Buying a home is a smart decision that comes with an array of challenges. It is a financial investment that warrants meticulous preparation for the process to be successful.
Applying for a mortgage speeds up your dream of owning a home. To pull this off successfully, you need to snag the best possible terms when securing your home loan. The interest rate pegged on your mortgage determines how much money you pay back as well as the total cost of the house. Low-interest rates keep the prices low and let you build equity in the home quickly.
Thus, you should meet the requirements that enable you to get the best possible terms. Here are some credible ways to get the best mortgage in Salt Lake City.
Make a Large Down Payment
If you’re targeting to buy a home worth $200,000, you’ll need to raise about $40,000 in deposit, which is no chump change. Given that you have other expenses pending each month, raising that much cash might be quite a task. It might seem easy to go for a mortgage plan that doesn’t need a deposit. While both methods can get you the home, the latter proves to be expensive in the end.
Borrowing more than 80 percent of the home’s value triggers the private mortgage insurance. The premiums amount to several thousand dollars a year but are distributed across the months. While the insurance lets you qualify for a mortgage, none of the money you pay goes towards buying equity in the home. Hence, skipping the 20 percent down payment saddles you with high monthly payments without lowering your principal loan amount.
Pick the Right Loan Duration
The length of your mortgage loan affects the interest rate. Typically, mortgage loans are repayable in 5, 10, 20, and 30 years. Shorter loan terms get you a better mortgage rate compared to longer ones. While short mortgages come with higher monthly installments, they save you a fortune as you pay back more of the principal amount each month. On the other hand, large mortgages stretch out the repayment period, which means that you pay more money in interest, making them expensive.
The key to successfully owning a dream house lies in getting the best possible rates when securing a mortgage. You need to make every effort to avoid getting an expensive home loan.