How To Get the Lowest-Cost Mortgage Loan
We all want to pay less for whatever we acquire, and a mortgage loan is no exception, particularly if we consider that buying a home is probably the single largest, most significant asset- purchase we make. The question is: how do I get the lowest-cost mortgage possible?
You might think that the answer is only concerned with choosing the lowest TAC (total annual cost) or interest rate. Surprisingly, that is not the only thing you should evaluate, since a low-cost mortgage loan results from a combination of the factors that play a role in the calculation of a mortgage and which must necessarily be analyzed before applying for such a loan. Please refer to the factors as detailed below:
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1.- Loan Payment Period
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2.- Minimum Wage or UDI*-based Credit
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3.- Interest Rate
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4.- Debt Level
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5.- Credit History
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The longer the loan payment period, the more you will pay over the life of the loan. On a 30-year mortgage loan, you will end up paying more than three times the original loan amount. On a 20-year mortgage loan, you will pay two to three times the original loan amount.
Solution: Take out a 15-year mortgage loan; you will pay at most 1.5 times the original loan amount. |
These tend to have variable interest rates and are almost always the highest on the market.
Solution: Take out a loan in pesos. |
Adjustable-rate mortgage loans may be affected by such factors as a situation of devaluation, which would be make these higher-cost loans.
Solution: Take out a fixed interest rate loan. |
People with a debt-to-gross income ratio of almost 40% are not considered a good credit risk, so the interest rates they are offered may not be the lowest.
Solution: Reduce your debt so that altogether including your mortgage, you do not exceed a 30% debt-to-gross income ratio. |
When shopping for a mortgage, individuals with good-standing credit histories (or credit reports) can select from a range of mortgage products with better terms, contrary to those people whose credit reports are less than perfect.
Solution: Clean up your credit report by paying all your financial obligations in due time and manner. |
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*UDI = an inflation-indexed unit of value as determined by the Banco de Mexico in order to settle or satisfy the obligations of mortgage loans or those of any financial or commercial act
So then, what is the ideal mortgage loan? Even when each individual person has a different profile, as a general rule, the ideal mortgage loan is one with a fixed interest rate, a 15-year maximum payment period, and fixed monthly payments.
How do you obtain the lowest-cost mortgage? By maintaining an excellent credit history and a sound debt level, thus allowing you to not only have access to the complete range of loans available on the market but to also be able to make the decision that best fits your profile.
Source: http://www.metroscubicos.com
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