So you’re starting a family and it’s finally time to let go of your bachelor pad and start thinking about buying a home. This is a huge decision, because for the most part, this is going to be the place that you are going to live for at least the next few decades of your life. It is also a huge decision because it is a very big financial step to take. Of course, a vast majority of people do not have a couple hundred thousand dollars that they can just easily put down on a new home.
So what do you do if you don’t have the money to just flat out buy a house? You do what just about every other person in your position does – you get a mortgage. Plain and simple, a mortgage is a loan that you get from the bank in order to be able to buy a house. Of course, you are going to have to put down some type of a down payment, so you cannot just go into the process with absolutely no money saved. But the bank will be fronting you for the majority of the money, and then you will spend the next 30 or so years of your life paying the bank back – with interest of course.
When it comes to interest on your mortgage, there are generally two types of mortgages that people get with two types of rates involved. The two most common options are a fixed-rate and an adjusted-rate mortgage. And the difference is pretty evident just by the names. When we are talking fixed-rate mortgages, that means that you are going to have the same interest rate on your loan for the duration of your mortgage.
When it comes to adjusted-rate mortgages, your interest rate will differ depends on financial factors –mostly the market value of your property and various economic trends that will also impact the rate.
And when it is time to take out a mortgage, you better have your financials in order. Of course, banks will not give out mortgages to anyone. You really need to have your financial in order if you want to not only get a mortgage, but also one with a favorable interest rate.
The bank will mostly be looking at your financial stability. This means that you really need to have a full time job that you have been with for a considerable amount of time, to show that you have been employed securely for a longer period of time and you plan on continuing to be employed for a while. They will also look at your credit score. If you are someone who has had trouble paying your bills, especially your rent, on time – this is something that can cause a bank to give you a high interest rate.