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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. Similarly, sites like
Beatthatquote.com provide a useful loans comparison
service that should save anyone in the market for good value mortgage a bit
of time and effort. Also, don't forget to make use of a mortgage
calculator before you take the plunge. They're quite a useful way of
determining how much you can realistically afford to borrow and what you
could expect to pay on monthly basis.
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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