6 Things You Must Know Before You Buy
"Subtle changes in the way you approach mortgage
shopping, and even small differences in the way you structure your mortgage, can
literally cost or save you thousands of dollars and years of expense."
Mortgage Regulations Have Changed . . .
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 the small differences in the way you structure
your mortgage can literally cost or save you 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 6 common mistakes
that most homebuyers make when mortgage shopping and they 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.
6 Things You Must Know Before Obtaining a Mortgage
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.
1. 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 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, which guarantees you a
mortgage to the specified level when you find the home you?re looking for.
2. 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 and 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.
3. 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.
4. 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. By simply structuring your payments so that they come
out more frequently, it will significantly lessen the amount of interest that you
will be charged over the term.
For the same reason, authorized pre-payment 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 pre-payment
privileges built in, so make sure you ask the proper questions.
5. 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.
6.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.
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