Whether you are looking forward to purchasing a new home or refinancing your current property, it is important to make educated and informed financial decisions regarding real estate purchases. This article will show you three tips to navigate your new life as a homeowner.
Tip 1: Ask your mortgage provider about Prepayment Privileges
What are Prepayment Privileges?
With Prepayment Privileges, you have the option to prepay all or a percentage of your mortgage principal ahead of schedule. This payment is usually penalty-free, and sometimes, the lender may even provide you with their “best rate.” These prepayments could save you money in the future as lump-sum payments decrease the overall value of the mortgage. Lenders have a duty to specify their borrowing terms and conditions, so be sure to ask them about the kinds of prepayment privileges they offer.
Tip 2: Ask your mortgage provider about Prepayment Penalties
What are Prepayment Penalties?
As you guessed – Prepayment Penalties are the exact opposite of Prepayment Privileges. Prepayment Penalties are “penalties” or fees and charges that the lenders impose when a borrower pays off a mortgage before maturity. This charge may be a set amount or a percentage of the principal balance, and lenders use this fee to cover any money they would have earned as interest if the borrower had paid on schedule. To avoid these unnecessary costs, make sure to ask lenders about their policies regarding Prepayment Penalties.
As interest rates rise, more and more of your monthly mortgage payments would go towards the interest rather than the principal. Using prepayment privileges to your advantage may help you save money and pay off your mortgage sooner. On the other hand, Prepayment Penalties may result in unnecessary fees and homeowners should always be informed as to when and if they should make a mortgage payment ahead of time.
Tip 3: For the best interest rates, keep a good credit score
When you apply for a mortgage, the first thing lenders will ask you for is a credit check. This is a vital step to ensure your reliability as a homeowner and to assess if you can pay off your mortgage in time. A good credit score demonstrates your trustworthiness, sense of responsibility, and financial ability. The higher your credit score is, the more likely for you to receive the best possible interest rates. To keep your credit scores in check, regularly monitor your score and make sure to pay off your credit cards on time. You may occasionally ask your bank for a copy of your credit score to ensure you are on the right track.
At Integrum Mortgage, we are ready and prepared to offer you our best rates and the best plans for your ideal home. Transparency and honesty are our top values, and we always put our clients’ best interests first. We understand the stress of purchasing your first home, and with decades of experience, our trustworthy advisors will help you navigate your journey in homeownership. Visit our office or contact us today! We can help you capitalize on your future possibilities.