Home buying is a great idea; you will find new opportunities, better environment, neighborhood, and home facilities. But there are few things that you should know before buying a new home. I will outline few key points that must be kept in mind before entering into any kind of deal.
Home buying is a lengthy process
Buying a new home take sometime as there are a few many things that you needed to do such as
Money for home buying
If you have got yourself quite some money in your pockets to buy a home you can just buy it without thinking about loans from home loan companies. But if you haven’t got that much money, you can still buy a home. Many Mortgage companies provide people funds to buy for themselves an ideal home in Chelmsford City. There are different kinds of mortgages provided to people. Here I will discuss what different mortgages are provided to people and when should people pay them back.
Fixed rate mortgages
People will be provided money to buy home and the loan is to be paid in a fix amount for over several years of time. Fixed rate mortgages are most popular and are represented by 75% of all loans. Loan is to be paid for an interval lasting for about 30,15 or 10 years. The advantage of fixed rate mortgage is that people will know about the interest rate to be pay and that will remain fix for that interval. People can easily budget their money to pay their loan back as they know the interest rate will not be change.
A mortgage plan in which the interest rate changes based on a specific schedule after a “fixed period” at the beginning of the loan, is called an adjustable rate mortgage or ARM. Getting 1 year ARM is risky as the interest amount can change if the buyer for some reason can’t pay a monthly payment. The advantage is that people can get more money by 1 year ARM than the previous package.
The 10/1 ARM is a plan in which interest rate for home loan is to be pay fixed for first ten years. After ten year the interest can be adjusted to the amount left to be paid. The plan will last for a life of 10 years.
2 step mortgages
2 step mortgages are the one in which interest rate of a part of mortgage i.e. first part remain same while the interest rate of other part change base on market price.
5/5 and 5/1 ARMs
In this plan the interest rate doesn’t change for first five years. At the beginning of 6th year the interest will be adjusted base on the market price of the house.
The plan is also known as “30 due in 5”; monthly payments and interests are not change for about 5 years. In the beginning of 6th year the interest is adjusted but the monthly payment remain the same.
3/3 and 3/1 ARMs
Monthly payment and interest remain the same for first 3 years. On the very first day of the 4th year the interest rate will be adjusted for every next year lasting to 3 years interval.
The monthly payments and interest in Balloon mortgage is lower than all previous plans but people have to pay large sum money at the end of the plan.
People can decide each mortgage plan based on their budget and their ability to pay the money back to the company. You should also know that when you get loans from mortgage companies the property you will buy is a collateral belongs to both parties. If you failed to pay the loan your lender can sell the property to finance back the loan money. For better idea of home loan you can take advice of solicitors. Solicitors are legal persons that help and guide you in your home moving process.
Best Solicitor in Chelmsford City
You can visit NBM Law head office to ask about the best home to buy in the city. The best way however to contact them is to visit their website https://www.nbmlaw.co.uk.