Monday, December 21, 2015

Six Things You Should Know Before Buying a Home

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 lending institution can provide you with written pre-approval at no cost and no obligation, and it call all 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 pre-approval with your lending institution, find out what level you qualify for, but also pre-assess for yourself what monthly dollar amount you feel comfortable committing to.  Your situation may give a pre-approval amount that is higher (or lower) than the amount of money you would want to pay out each month. Use the Mortgage Calculator to determine an approximate monthly P & I (principal and interest) payment.  Then work with your lending institution so that you don't waste time looking at homes that are not in your price range.   Remember that yearly property taxes and homeowners insurance are normally part of your monthly mortgage payment so both should also be taken into consideration.  I can provide you with current tax information and assist you in deterring the approximate total monthly mortgage payment.

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 on 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 pre-payment privileges and payment frequency options are available to you.  More frequent payments (for example weekly or biweekly) can literally shave years off your mortgage.  Simply by structuring your payments so that they come out more frequently, will significantly lessen the amount of interest you will have to pay.  For the same reason, authorized prepayments 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 mortgage term considerably.

5)  Ask if your mortgage is assumable.  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 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.   If you aren't sure of the avenues available to you, I can suggest companies which specialize in this area.

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