Getting a mortgage loan that’s right for you takes some effort.
- Mortgages are typically repaid over 15 to 30 years, so borrowers must pay their loans for a long time.
- Finance expert Suze Orman has some tips for getting the right mortgage.
- She advises to know your budget, shop around for lenders, and choose a lender who can work quickly.
Shopping around for the best loan rates and terms is important before you do any borrowing. But it’s especially crucial you put in the work to find a loan with the best terms when you’re taking out a home mortgage. That’s because chances are good you’ll be borrowing a lot of money and repaying it over many decades.
Unfortunately, finding the perfect mortgage can be easier said than done because there are so many different lenders and kinds of loans you can choose from. The good news is, identifying the right loan is easier if you follow finance expert Suze Orman’s three-step process.
Here are the steps Orman says you should take when looking for a home loan.
1. Don’t let the lender set your budget
The first step Orman suggests taking is to decide for yourself how large of a mortgage loan fits your budget.
She warns you should make your own decisions about how much to borrow rather than getting sucked in by mortgage lenders who may offer you a larger loan than you’re comfortable with.
Mortgage lenders typically want to give you the biggest loan they think you’ll be able to afford, as this maximizes their profit. While it’s tempting to take the extra money and buy a more expensive home, the fact is a large mortgage payment could interfere with other financial goals you have.
If you take the time to decide what fits your budget — while also accomplishing other tasks, such as saving for retirement — you’re much less likely to be talked into borrowing a big amount of money that leaves you house poor.
2. Shop around with different financial institutions
Orman warns against assuming your current bank will always provide the best deal on a mortgage loan.
Instead of sticking with the status quo and just applying for your home loan with the financial institution …….