Six Important Things to Know Before Getting a Mortgage

The real estate market has changed considerably over the last few years, and so have the types of mortgages. Knowing what type of mortgage best suits your needs can save you thousands and thousands of dollars over the course of your home loan. Industry research has shown, however, that home buyers still make crucial mis¬takes when they decide upon a mortgage. Not only can they lose money from making these wrong choices, but they can also lose certain advantages at the negotiation table. By familiarizing yourself with all of your mortgage options, you can get a mortgage that can cost you less money, and over a shorter period of time.

Here are six issues to consider before you commit to any mortgage:

  1. Get pre approved for a home loan before you begin searching for a house.
    Written pre approvals are offered by most lending institutions for no cost or obligation. Such pre approval involves completing a credit application, and includes certification which will guarantee a home loan for a specified amount. And it’s easy to do...most lending institutions can lead you through the entire process over the phone!

  2. Decide upon a monthly dollar amount that you know you can handle.
    When you discuss your mortgage options with your lending institution, be clear about the size of the monthly mortgage payment you can afford, and have them work around that amount. This way, you can immediately communicate this to your real estate agent, and you will immediately be able to save time and search for a house that you know will fit your budget.

  3. Think about your long-term financial situation before you commit to any type of mortgage.
    Ask yourself how long you are planning to live in this home. Ask yourself if interest rates are chang¬ing, and in what direction. Ask yourself if your income is expected to change anytime soon, or if you are planning to retire in the next few years. All of these issues will affect your ability to pay your mortgage, and should be considered before you decide upon any specific mortgage options.

  4. Understand all of your mortgage options when it comes to payment frequency or other privileges.
    By enrolling in a mortgage that increases the frequency of your payments (such as bi-monthly), you can save thousands of dollars in interest and take years off the length of the mortgage. You can also shorten your mortgage by paying predetermined lump sums in addition to your normal payments, or by simply increasing the amount each month. These features are not automatically included in all mortgages, so make sure these payment privileges are available before you commit.

  5. Find out if your mortgage is portable or assumable.
    A portable mortgage, by definition, is one where you can carry the terms of your existing mortgage over when you purchase a new home, as long as you are not buying a house that is significantly more expensive than your last one. This way, you will not have to go through the mortgaging pro¬cess all over again. An assumable mortgage is one where the person who buys your home can take over the same mortgage after you move to your new house. Both of these options can give you an advantage during negotiations with a buyer, and can help you to save money by avoiding discharge penalties.

  6. Enlist the services of a mortgage expert.
    Seeking assistance from a mortgage expert will help you to save time and money by making sure the mortgaging process goes smoothly, and that you have the right type of mortgage to fit your needs. In addition, there is usually no cost or obligation for getting mortgage advice from a quali¬fied professional.