How to Choose the Right Home Loan Wisely

First time buyers usually do not have any idea on how they can choose from a wide variety of home loans that are being offered. There are times when people make the mistake of only considering the home loan that will be beneficial to them right now without realizing that there are some home loans that might serve them better in the long run.

It is only normal for people to become a bit confused with the choices that they ought to make especially because there are also some things that people do not understand about home loans in general.

What Loan Seekers Should Pay Attention To

Here are just some of the things that loans seekers should consider so that they can possibly choose the right home loan for them:

  • Processing Fees – The things that will be processed will not be done for free. There are instances when the fees do not cost a lot of money but people still have to pay.
  • Pre – Payment Charges – There are some home loans that come in very small pre – payment charges. Whether this will be beneficial for some people or not may depend on them a lot.
  • Rate Flexibility – People may choose to get a fixed rate option that can of course some with its own advantages and disadvantages. There are also some lenders that will allow the person to pay depending on the current rates.

It is highly important that people will give attention to their current income and budget for the home loans that they have to pay. Some people tend to get home loans bigger than what they know they can afford in the hopes of acquiring the house of their dreams but this is not always beneficial. Being realistic may pay off in the long run.

Instead of purchasing a “dream” house immediately, it may be best if people could just focus on purchasing what they can afford in the beginning and they can then start focusing on getting a better investment in the long run. More details about this can be checked out here:

When all of the things that have been considered still do not seem to be good enough, checking out refinance home loan can be a great move. This will allow people not to pay for the mortgage in the beginning. This will help people get back on their feet first before they can start paying.

What is reverse mortgage about? A little introduction guide

We all know what mortgage is.

When you buy a house, you will usually take a housing loan from the bank. If the bank lends you $300,000 to buy a house, that will be the money you owe the bank. Throughout the years, you can decide how long you want to pay back the bank. Of course, it cannot be as long as 80 years. A typical home loan range from 10 years to 25 years. The shorter the loan, the higher the monthly installment you pay. The opposite is true too. The longer the loan, the lower the monthly installment.

That is mortgage. You pay monthly mortgage to the bank.

When you have finished the mortgage payment, you fully owned your house. The house is yours.

What about reverse mortgage?

Here’s a short video to explain to you:

You can watch the video on Youtube here too.

In short, reverse mortgage means you convert part of the equity of your home into cash from the lender, who is the bank. You can do this without selling your home or pay additional bills. There are a few countries who have supported this initiative, and it is usually started for the elderly who are 60 years old and above.

In Canada and US, reverse mortgage are quite popular as it is one way for the elderly to receive cash payments for their retirements. This initiative has given some opportunity for the elderly to ‘cash out’ their house, without selling them. The Singapore government is starting to look into this initiative, because of its increase in elderly population too.

You can read more about Reverse Mortgage on wikipedia too.

Is this reverse mortgage initiative to be supported? Will you support it?

Let us hear your views below.