Factors to consider when getting a mortgage
A mortgage is likely the biggest loan you will ever take out, so you want to take into account several factors to make sure you are getting the best deal possible.
Your credit score
Those mortgage rates you see advertised on TV and in newspapers are the best rates available, and they are only available to people with the best credit scores. For most lenders, that's somewhere around 760 on the FICO scale. If you have a score below that threshold, you likely can pay a higher rate, which can result in thousands of extra dollars in finance charges over the life of the loan.
Your down payment
Though you can get low down payment and even no down payment mortgages these days, you will pay extra for the privilege. Unless you are in a government program, paying less than than 20 percent of your purchase price upfront will result in you having to pay for mortgage insurance. This varies based on the size of your loan and how much of a down payment you have. It is added to your monthly payment and won't go away until you have at least 20 percent equity in your home.
Other costs
Keep in mind that a monthly payment you are quoted may not include property taxes and homeowners insurance, which nearly all lenders these days require you to pay in monthly installments along with your mortgage payment. You also will face several thousand dollars worth of upfront closing costs to get your mortgage. These are all costs you need to account for. For more details click on Target Rate.
A mortgage is likely the biggest loan you will ever take out, so you want to take into account several factors to make sure you are getting the best deal possible.
Your credit score
Those mortgage rates you see advertised on TV and in newspapers are the best rates available, and they are only available to people with the best credit scores. For most lenders, that's somewhere around 760 on the FICO scale. If you have a score below that threshold, you likely can pay a higher rate, which can result in thousands of extra dollars in finance charges over the life of the loan.
Your down payment
Though you can get low down payment and even no down payment mortgages these days, you will pay extra for the privilege. Unless you are in a government program, paying less than than 20 percent of your purchase price upfront will result in you having to pay for mortgage insurance. This varies based on the size of your loan and how much of a down payment you have. It is added to your monthly payment and won't go away until you have at least 20 percent equity in your home.
Other costs
Keep in mind that a monthly payment you are quoted may not include property taxes and homeowners insurance, which nearly all lenders these days require you to pay in monthly installments along with your mortgage payment. You also will face several thousand dollars worth of upfront closing costs to get your mortgage. These are all costs you need to account for. For more details click on Target Rate.