Getting a mortgage is by no means a simple feat. Applying, learning, and accepting a mortgage loan is consuming and complex process. For most people, getting a home mortgage loan is one of the most significant events in their lives, especially in the financial realm.

In this regard, no effort should be spared in ensuring that you get a home loan that’s affordable and a house that’s in good condition. In this regard, here are five vital tips you should consider before accepting a mortgage loan.

accepting a home Mortgage Loan

Set an appropriate budget

It is important to determine how much you can spend when buying a house. You can either use an online calculator or get pre-approved by a lender. This is usually done by looking at your income, credit and debt so as to determine the loan that fits your financial status.

The rule of thumb in these scenarios id usually to go for a home that costs around two and half times your annual gross salary. It is also important to note that your monthly mortgage payments should not be in excess of thirty six percent (36%) of your gross monthly income.

Read your loan documents (twice)

It is your responsibility to read and finally accept the terms provided in the new mortgage. Make sure you go through each page of the loan documents before signing the dotted line. Good home mortgage lenders will often do this process with you.

If you have any queries or concerns, make sure you raise them with your home mortgage lender before you sign, if there are any agreements, make sure they are all captured in the document. Unless you do this, you may just end up with a mortgage that can only be termed as predatory and with nowhere to turn.

Look at the total monthly mortgage loan payment

mortgage loan lenderIt is important to know, before you sign the dotted line and accept, that home loan you are being offered has specific rates that impact the monthly mortgage loan payment. These details are represented as an acronym, PITI (Principal, Interest, Taxes and Insurance). Make sure you factor-in your property taxes and insurance premium into your mortgage budget and find out if you can afford the loan you are seeking or being offered.

Know that your down payment matters

You will be expected to come up with cash for your closing costs and down payment. Most lenders prefer seeing twenty percent (20%) of the price of the home as down payment. With a down payment that’s below twenty percent, you should be ready to pay for a PMI (private mortgage insurance).

This is a cover that protects the bank in the event that you fail to make the required payments. This usually adds around 0.5% of the total loan amount to your repayments for that particular year. Whenever possible, make sure you can raise more than the twenty percent as this not only reduces your overall loan but also reduces the mortgage loan repayment period.

Get your own home inspection done

In addition to the appraisal your mortgage lender will have on the house, make sure you have a report from your own home inspector before you sign up for a mortgage. An inspection will cost you between $300 and $1000 depending on the size of the home and takes around two hours to complete.

Your independent inspector will give you report regarding the overall condition of the house, construction materials used, the heating and wiring condition etc. in the event that your inspector comes up with major issues such as the need to replace the roof, have your lawyer discuss this with the seller and either have the problem fixed prior to signing or have the cost deducted from the selling price. Make sure the home loan you are just about to sign for does offer you a home that is in good condition.

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