Availing a mortgage can be confusing as there are so many options available today. It is important to make an informed choice as any mortgage is not a “one day” matter. It will remain with you for a long time at least 5-10 or more years.
While mortgages enable you to buy your dream home or commercial property instantly it is a debt and needs to be paid back with interest. Since a mortgage is a long term financial commitment you need to consider aspects like income, expenditure, expanding family needs, and more before going right ahead and buying a home you really cannot afford. If you find yourself in apposition of confusion, seek the help of an independent financial advisor. Try not to consult a real estate agent or loan officer at the bank as it is in their interest for you to buy a property or avail a loan. A professional financial consultant will be able to sit down with you and study your case and then make sensible and practical recommendations based on aspects like income, future prospects and so on.
According to experts it is important to:
a. Know what kinds of mortgages are available. Study the various options with care. Know whether to select a fixed rate mortgage or adjustable rate mortgage.
b. Know your needs and based on that decide which type of mortgage you don’t need.
c. Next weigh the pros and cons of the remaining types and then choose the mortgage that is ideal for you.
When selecting a mortgage the most important things are:
1. Determine how much you can afford to pay towards the principle and interest each month. Remember you must have enough money left over to meet daily needs. Be practical and create an income/expenditure chart. And in your planning be sure to include escalation in expenses say for example a child will be due to start going to college in 3-4 years and so on.
2. Always make the effort of doing a comparison of lending rates and mortgage packages. There are online comparison tools that you can use.
3. Select a reputed and dependable mortgage company. Do a background check on the company you intend to use and make sure there are no complaints against them. Try and avail a mortgage from an institution you are already familiar with, for instance your own bank or credit union. Find out if the pace you work in has a tie up with any bank or financial institution.
4. Work out the loan tenure intelligently. Depending on the interest rate payable if you chose a long tenure you will pay out considerable amounts as interest. In case you find it difficult ask a loan officer to help you decide the tenure.
5. Always read the contract/agreement carefully. And if the mortgage has insurance cover avail that. This protects your family in case of death or any other problems.
A mortgage is a long term commitment and non payment or defaulting can mean loosing your home. So a mortgage must always be selected with care.
Dennis Cullins is a retired Mortgages Agent and a writer for Mortgage Loans, the premier website to find free search for best mortgage rates, home equity, investments, auto, Credit Cards, cash out refinancing, home loans, home equity loans and many more.