Home purchasing is an exciting time, but don’t let buyer’s bliss affect your ability to research the best mortgage option. Know the ins and outs before you’re doomed.
You have found the house of your dreams and you are ready to make that big purchase. The next scary step… the mortgage. Since this will be the largest and most important financial purchase you will ever make, it is best to research all the options available to you so you can ultimately make the best decision based on your needs and financial status.
Mortgages can be very complex, tricky documents. Add in the many different providers to choose from and the options are endless. A mortgage can be obtained from big charter banks, credit unions, or independent mortgage brokers, online and in person. The large variety of lenders means the mortgages offered are all very different. Making it increasingly important to do your research and know the documents you are signing, inside and out. Mortgage terms and processes are intricate and it can be frighteningly easy to end up with the wrong package.
Get accurate information
Your friends are trying to be helpful, but may inaccurately relate specifics to you. It is in your best interest to speak to a mortgage professional you trust. Independent mortgage brokers are a great tool, as they are not obligated to sell you their product (unlike financial institutions) and can source the best options from a wide selection for you.
When researching your options, know that interest rates aren’t the only term on which to base your decisions. Payment frequency (increasing the frequency of payments) will be beneficial to you as it aids in reducing the overall cost in interest. Flexibility is negotiated before you sign the documents, so ensure that you are receiving the most flexibility, allowing you to make the most of your cash flow and pay down the principal faster. When it comes to amortization periods, aim to reduce the period to less than the typical 25 years, as this will save you money in interest in the long haul.
Beware of all the conditions of the mortgage as there can be unexpected fees for early exit charges, insurance fees, appraisal fees, and legal fees. They key is to actively engage in searching for the best mortgage given your current financial status and determine who will give you the best overall package.
Going it alone may seem like a good idea when shopping for a mortgage, but be aware that there are often hidden or unexpected costs, and certain terminology you don’t quite understand, resulting in restrictions you weren’t even aware of. It is extremely imperative to do your homework and consult with reliable professionals, ensuring you are aware of the terms of the mortgage you are signing, so there are not any dreadful surprises in the future