6 Things You Must Know Before You Buy

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.

 

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.

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.

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.

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.

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.

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.

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.

 

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.