6 Things to Know Before Buying a Home

Mortgage Regulations Not as Stricted
Over the last couple of years, the government has changed mortgage regulations to make it easier for consumers in their search while mortgage shopping. Even with the more lax regulations, it is still vital that you are aware of 6 common mistakes that potential homebuyers make while shopping for a mortgage. These mistakes could result in higher fees or even a higher monthly mortgage payment.

6 Things You Must Know Before Obtaining a Mortgage
Buying a new home means the responsbility of making the required monthly mortgage payments. Making an informed decision becomes more important in this case.

1. Get pre-approved for a mortgage or home loan before looking for a home
Getting a pre-approval is quite easy, and can give you complete peace-of-mind while shopping for your home. Your local home lending institution can provide you with written pre-approval for you at no cost and no obligation, and it can 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. Determine a comfortable monthly dollar amount for your home loan
When you discuss mortgage pre-approval with your lending institution, find out what level of borrowing you qualify for. Your situation may give you a pre-approval amount that is higher (or lower) than the amount of money you would want to pay out each month. Work with your mortgage broker and lender to determine what monthly amount you are most comfortable with, and what value of home this translates into at today’s rates, you won’t waste time looking at homes that are not in your price range.

3. Determine your long term goals, and expected situation
How long do you plan to own the house? Will this be a long term stay or a short term? Do you plan to sell the house soon or rent it out after you move out? Are the interest rates rising? Do you expect to make more money? These are just a few of the questions you should consider before buying a home. The answers will help you figure out which mortgage is the most appropriate.

4. Make sure you understand what prepayment privileges and payment frequency options are available to you
More frequent payments (for instance weekly or biweekly) can literally knock off a few years off your mortgage. By structuring your payments so that they come out more frequently, you will save quite a bit off the interest in the long run since interest in a mortgage is front loaded.

For the same reason, authorized pre-payment of a certain percentage of your mort-gage, 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 payment term considerably.

These two payment options can cut years off your mortgage, and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in, so make sure you ask the proper questions.

5. Is your mortgage portable and/or assumable
A portable mortgage is one that you can carry with you when you buy your next home and avoid paying any discharge penalties; meaning that you'll not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home.

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 again saves you any discharge penalties.

6. Consult with a mortgage expert
Consider dealing only with a mortgage professional who specializes in mortgages and home loans. Obtaining their services can make a significant difference in the cost and effectiveness of the mortgage you get. For instance, they can make the process faster thereby avoiding costly delays. Typically there is no cost or obligation to enquire.