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Finding the right mortgage deal.
There is no doubt that buying a home is a major investment, both in terms of
time and in terms of money. For many of us, the roof over our heads is the
single biggest purchase we will ever make, and it only makes sense to finance
that major purchase the right way. With so many different mortgages to
choose from, however, it can be difficult to find the right one.
From mortgage brokers and mortgage bankers to the local bank and credit
union, there are many different mortgage lenders to choose from. It is
important for home buyers to carefully look examine the choices they have at
their disposal in order to make a wise and frugal decision.
Fortunately, there are some tips mortgage shoppers can use to get the most
out of their home loan and to ensure that they have truly gotten the best deal.
Some of the most useful mortgage shopping tips include:
- Get advice – It is a good idea to solicit the advice of friends, family
members, co-workers and others as you enter the mortgage arena. Those
who have been there and done that can often provide valuable insights into
the right steps to take as you move forward. Perhaps even more
important, these individuals can help you to avoid some of the most common
mortgage shopping pitfalls.
- Get pre-qualified – Going through the prequalification process can be a
real stress reducer, as well as a great way to cut through the clutter of
the home buying process. With a prequalification letter in hand, you
will know exactly how much home you can afford, and the home seller and real
estate agent will know that you can back up any offers you make. Home
sellers will often choose a slightly lower offer from a pre-qualified buyer
over a higher, but riskier, offer from a buyer without such qualifications.
- Track the direction of interest rates – While even the experts have
trouble accurately predicting the movement of interest rates, tracking their
movement for several weeks or several months may give you a general idea of
where rates may be headed. This information will be important as you
decide whether to lock in a favourable rate on a fixed rate mortgage or opt
instead of the flexibility of a variable rate loan. At the time of writing
A&L mortgages
were offering 5.87% on their Premier Fixed Rate mortgage for a period of two
years. Natwest mortgages
were offering a similar deal for two years with interest at 5.99%.
- Consider all your options – It is a good idea for mortgage shoppers to
consider all of their options when comparing loans. There are many
sources for mortgages, from mortgage brokers and mortgage bankers to the
bank down the street. Credit unions and large national banks can also
provide mortgage loans. Leaving all your options open may yield you a
better home mortgage loan. Of course it pays to read the fine print
carefully and compare the loan terms carefully as well, but having more
loans to choose from certainly won’t hurt. The
Motley Fool have been comparing mortgages
since around 1998 and have a comprehensive and up to date website that can
remove a lot of the hard work you would otherwise have to do.
- Don’t forget about closing costs – Last but not least, be sure to
factor in closing costs as you compare your various mortgage loan offers.
While such costs can seem small in comparison to the cost of the home, these
charges can add up quickly. It is important to keep closing costs as
low as possible, especially for first time home buyers who may have little
spare cash to work with. Don’t forget to ask about closing costs
when talking with potential lenders.
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