Mortgage Ideas
When you're considering a home purchase, you might be inclined to start house-hunting right away. However, experience proves this is one of the last steps you should take if you want to get the most home for the least amount of money. In fact, shopping for the best financing should start long before you start hunting for a home.
Below are 6 critical ideas to consider and discuss with your mortgage lender, so you can be as prepared as possible.
1. Mortgage Pre-approval
More than just a verbal approval, a written pre-approval is as good as money in the bank. Pre-approval is easy, at no cost, no obligation, and gives you complete peace-of-mind. It includes a completed credit application, and a certificate which guarantees a mortgage to a specified level. Now you'll have emotional security in the house-hunting process, and insurance against rising interest rates in the market place. If rates go up, you still get the pre-approved rate, and if rates go down, you receive the lower rate.
2. Your Comfort Zone
Mortgage pre-approval shows how much of a home you can afford, and translates into a monthly payment that you need to feel comfortable with. You should only be looking at homes that you can afford. You should factor in all of lifes other costs as well to determine your comfort level. Everyone's situation will be different.
3. Long Term Goals
How long do you think you will own this home? What direction are interest rates going, and how quickly? Is your income expected to change - up or down, in the future? These answers, amongst others, will determine the type of mortgage you should seek, when it comes to terms, amortization periods, fixed and variable rate mortgages, etc.
4. Prepayment Privileges, and Payment Frequency
Prepayments are options to make lump sum payments to pay down your mortage quicker. Frequency payments is how often you wish to make them. Normally, it is monthly, but you may be able to pay weekly, or biweekly, which can literally shave years off your mortgage, because of the extra interest you'll save.
5. Portable and/or Assumable
A portable mortgage is one that you can carry with you when you buy your next home. This means you will not have to go through the entire mortgage process again, unless you are making a significant change. An assumable mortgage, is a mortgage held on a property by the Seller, that can be taken over by the Buyer, who then accepts responsibility for making the mortgage payments.
6. Mortgage Broker
Mortgage lenders come in a variety pack. There's banking institutions, credit unions, private lenders, etc. Each one is subject to their own in-house policies when it comes to setting interest rates. Mortgage brokers however, take the guess work out and can shop you around to all these areas at once. They can find the key interest rate, and terms, you're looking for based on your situation and circumstances. This helps you significantly from doing the leg-work on your own, and virtually assures you of the best deal.
We have oodles of mortgage terms and definitions in our Glossary, so please take a peek. We're always here for you. Reach out to get started.
