Mortgage regulations have changed significantly
over the last few years, making your options wider than ever. Subtle
changes in the way you approach mortgage shopping, and even small
differences in the way you structure your mortgage, can cost or save
you literally thousands of dollars and years of expense.
Get the Right Information
Whether you are about to buy your first home, or are planning to
make a move to your next home, it is critical that you inform
yourself about the factors involved.
Industry research has revealed that there are 6 common mistakes that
most homebuyers make in mortgage shopping that can have a
significant impact on the outcome of this critical negotiation. If
handled correctly, these issues could result in a mortgage that will
cost you less over a shorter period of time.
Before you commit your hard earned dollars to monthly mortgage
payments, consider these 6 issues. Effective consideration of these
important areas can make your payments work much harder for you.
You can, and should, get pre-approved for a mortgage before you go
looking for a home
Pre-approval is easy, and can give you complete peace of mind when
shopping for your home. Your local lending institution can provide
you with written pre-approval for you at no cost and no obligation,
and it can all be done quite easily over the phone. More than just a
verbal approval from your lending institution, a written
pre-approval is as good as money in the bank. It entails a completed
credit application, and a certificate that guarantees you a mortgage
to the specified level when you find the home you're looking for.
Know what monthly dollar amount you feel comfortable committing to
When you discuss mortgage pre-approval with your lending
institution, find out what level you qualify for, but also
pre-assess for yourself what monthly dollar amount you feel
comfortable committing to. Your situation may give you a
pre-approval amount that is higher (or lower) than the amount of
money you would want to pay out each month. By working back and
forth with your lending institution to determine what this monthly
amount is, and what value of home this translates into at today's
rates, you won't waste time looking at homes that are not in your
price range.
You should be thinking about your long-term goals, and expected
situation, to determine the type of mortgage that will best suit
your needs
There are a number of questions you should be asking yourself before
you commit to a certain type of mortgage. How long do you think you
will own this home? What direction are interest rates going in, and
how quickly? Is your income expected to change (up or down) in the
near term, impacting how much money you can afford to pay to your
mortgage? The answers to these and other questions will help you
determine the most appropriate mortgage you should be seeking.
Make sure you understand what prepayment
privileges and payment frequency options are available to you
More frequent payments (for example weekly or biweekly) can
literally shave years off your mortgage. Simply by structuring your
payments so that they come out more frequently, will significantly
lessen the amount of interest that you will be charged over the
term.
For the same reason, authorized prepayment of a certain percentage
of your mortgage, or an increase in the amount you pay monthly, will
have a major impact on the number of years you will have to pay and
could shorten your payment term considerably.
These two payment options can cut years off your mortgage, and save
you thousands of dollars in interest. However, not every mortgage
has these prepayment privileges built in, so make sure you ask the
proper questions.
Ask if your mortgage is both portable and/or assumable
A portable mortgage, where available, is one that you can carry with
you when you buy your next home and avoid paying any discharge
penalties. This means that you will not have to go through the
entire mortgage process again unless you are making a move up to a
much more expensive home.
An assumable mortgage is one that the buyer for your home can take
over when you move to your next home. This can be a very powerful
tool at the negotiating table making it much easier and more
desirable for a buyer to buy your home, and again saves you any
discharge penalties.
You should seriously consider dealing with a Mortgage Expert
Consider dealing only with a professional who specializes in
mortgages. Enlisting their services can make a significant
difference in the cost and effectiveness of the mortgage you obtain.
For example they can make the process faster thereby avoiding costly
delays. Typically there is no cost or obligation to inquire. |