Picking the Right Mortgage – It’s Easier Than You Think

HYPOTHÈQUE
Picking the right mortgage is a big deal. After all, you’ll have it for the next 15 or 30 years. You want to make sure you get this decision right. If this is not your first mortgage, you may have some of an idea what to expect and of how to determine a mortgage based on your needs and requirements. If this is your first mortgage, have no fear! Things may seem quite complicated and you might not know where to go or what to choose. Don’t worry – Today we’ll be discussing the three most important factors of deciding if a certain mortgage is right for you. You will leave this article feeling much more confident in your decisions. 
 
What To Look For In a Mortgage
Do you need an assistance program such as a first time home buyer’s program or a program for those with a low down payment or low credit? Some lenders and government headed finance agencies offer these assistance programs. If you need one, make sure that you get a mortgage that offers it. Government loans generally offer more relaxed qualification requirements anyway, so if you just need a little boost, you may direct your search in that direction. 
 
Look for low interest rates, of course. You can use online rate comparison tools to see current interest rates from multiple different lenders. Compare annual percentage rates, or APR, as well. This will give you a more complete picture of what you’ll pay over the loan term. Also compare application fees, appraisal fees, title and loan origination fees, and closing costs. Don’t sign anything before each of those numbers has been explained to you and you are comfortable with each of them – there are tons of details involved with a  mortgage and one missed could mean thousands more dollars paid into your loan. Ask for a lot of clarification! 
 
Look for a mortgage with an agreeable term length. A short term mortgage will cost you less over time, but more up front and more per month. A long term mortgage will cost you more over time but less per month, and likely less up front. Which is best for you depends completely on your financial situation, but you must do your research on both options. Your lender can compare term lengths with you to show you how much, estimated, you would pay per month with each choice. When choosing the length of your term, also consider if you plan on moving in the next ten years as well as if you want to have the same payment for a longer period of time.  
 
Another thing you should look for is a mortgage with your preference in rates – fixed or variable. Fixed rates stay the same for the entire term. Variable rates change on an agreed upon schedule, and can go up or down. When you decide which type of rate is best for you, remember that the rise and fall of interest rates is hard to predict, and consider how much of an increase in mortgage payments you could afford if interest rates rise. If the idea of your interest rates skyrocketing stresses you out, perhaps consider a fixed rate mortgage. This type of mortgage will be better for you if you want to know in advance what your monthly payment will be, or if you expect interest rates to rise over the term of your mortgage. Whichever rate type you decide is best for you, make sure your loan type offers it. 
 
What Type of Mortgage Loan is Best for Me
The first thing you need to do here is assess your situation. What is your credit score and history? This is arguably one of the most important numbers involved when getting a mortgage. Consider your financial well being and try to forecast your financial future. Also consider your life plans – will you stay in this house for the rest of your life, or do you want to flip it and re-sell? What loan types do you qualify for? What interest rate types do you prefer? Once you have the answer to all of these questions, you will have an easier time determining which type of mortgage loan is best for your situation. If you are stuck on any of the questions above, your broker or lender should be able to help you out. 
 
Mortgages are like finger prints. Every one is unique. Just because a certain type of mortgage loan worked for your friends or your parents, it may not work for you – at all. Your financial situation is different than theirs, and requires different amenities from a mortgage loan program. A loan program one person uses may even be completely unavailable to another person. Your lending advisor will help you make the right call. 
 
Consider these factors when you are speaking with your lending advisor: Which loan has the lowest monthly payment? Which option requires the least amount of money up front, and do the lower payments now equal larger payments later? What option will cost me less over time? How does my income affect the loan programs for which I am eligible?
 
There are no bad mortgage loans, only mortgage loans that aren’t right for some people. You and your lender will work out which loan program is your best choice to help you reach your goal of owning a home affordably and comfortably.
 
How to Choose a Mortgage Lender
Request quotes from multiple lenders – not just one or two. This costs you nothing and doesn’t hurt your credit score. Pay attention to more than just the interest rate. Look at the annual percentage rate, origination fees, and other fees they may require. Don’t hesitate to ask a lender to “price match” another lender or to ask them about any fees that seem duplicitous or confusing. You have the right to negotiate and to ask questions. Be sure you are clear and comfortable with all the terms you must agree to.
 
Look for a mortgage lender who offers free pre-qualification. A pre-approval letter will assist you in staying on budget and tells sellers that you can get a loan and were responsible enough to take the extra step. Pre-qualification will not ding your credit score and requires less information given on your part to determine your pre-approval amount than if you went through with the mortgage. Once you get your pre-approval letter with your loan estimate, you can then agree to move forward with this specific lender or not – so getting pre-approved is not a promise that you will work with a certain lender. Any lender you go with should offer pre-qualification. 
 
Never immediately sign with the first lender you come into contact with. You must always compare your options. Sure, the first lender you meet given may sound fantastic, but there may be an even better one around the corner. You can ask family and friends for recommendations, and then take a look at online reviews that can help you compare customer experiences. Besides getting a good rate, you want to choose a lender that has great customer service. You want a lender who is prompt to respond, friendly and educated, willing to assist, and honest.
 
Use the two qualifications of “great rates” and “stellar customer service” to make a short list of mortgage lenders for you to choose from. Get pre-approved with all of them – it’s free and will give you a better picture of what working with each lender will be like. After that, make your decision of which lender you will go with. Highly trained and experienced lenders will be able to help you get great rates and choose the best financing options. They will be passionate about what they do and you should feel comfortable asking them for clarification on anything that happens during the loan process that confuses you. 
 
Another thing you should do is ask each lender for their specific experience with the type of loan you are looking for. Your lender should have a lot of experience with situations similar to yours. It pays to ask each of your potential lenders this question as it is another way to let you know if the lender you are in contact with is wrong for you. You’ll be working closely with them, so you want them to know what you need. 
 
Getting a mortgage loan is a lot of work and can be confusing, especially for first time buyers. One thing a buyer can do to help themselves when getting a mortgage is to make sure they understand the options and features of each lender available to you as well as each program they offer their clients. Your mortgage professional will also be able to assist you in choosing which loan style best fits your needs. Choosing what type of mortgage is best for you can be easy and fun, especially if you know what to expect.

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