August 16, 2013

4 Tips to Know When Shopping For a Mortgage

A home purchase could very well be the most expensive and important financial decision that will be made in one’s lifetime. If there is a home purchase somewhere in your present or future plans, it is important to learn everything that is possible about the process. This includes choosing a realtor, a home, a mortgage lender and a mortgage. The more a home buyer knows, they better they will be prepared for any obstacles that may happen. Better yet, this knowledge is the first step to avoiding any pitfalls when purchasing a home. With this in mind, let’s look at 4 tips to know when shopping for a mortgage.

1. Affordability

The individual purchasing the home is the best one to judge what is affordable for their budget. When preparing to look for a home, reviewing your monthly income and payments will help determine how much money can be spent on a mortgage, real estate taxes, homeowner’s insurance, maintenance of the home and everyday expenses including utilities. Planning with these things in mind will prepare you for what is ahead for many years to come. After all, a home purchase and a mortgage is a long term commitment. Although a mortgage lender may tell you how much mortgage you can afford and be approved for, be mindful of your own budget and what you will be comfortable living with for a long time. Remember that the final mortgage can be less than the original mortgage approval that was given to you so that you could shop for a home.

2. Shop Around

There is no doubt that purchasing a home takes a lot of time and that finding the right mortgage can also be time consuming. Rushing into either of these can cost you a lot of money, even thousands of dollars. There are several ways that home buyers can shop for a mortgage. Lenders, brokers and internet sources are all available to find a competitive loan and each one should be considered by a home buyer. However, none of these entities will find you the best loan out there for you. It is up to you to do the homework, the shopping and the comparing of what is available and being offered before making a final decision. Shopping for a mortgage can be done before looking for a home so that you are in a better position to know what type of home to consider.

3. Learn About Mortgage Products

Mortgages are available with many features including fixed rate loans and adjustable rate loans. Some may have payment adjustments, prepayment penalties and balloon payments. There are different loan products for different needs; conventional loans and government loans including FHA mortgages and VA mortgages. There are also different settlement costs associated with each mortgage product. While a lender can help you with the different aspects of a mortgage and the varieties available, it is up to you to have as much knowledge as possible prior to any discussion since you will be making the final decision and signing the closing documents.

4. Mortgage Pricing and Fees

No one says that you must accept the first mortgage that is offered to you. While you may see mortgage rates advertised, the rate and fees offered to you may be different and for valid reasons. However, even if two individuals have the exact same qualifications, they may be offered different rates and fees. Remember that lenders will consider the profit they are making when a loan offer is made to a borrower. Shopping around and comparing rates and fees is the best way to avoid an expensive loan. Sometimes, having comparisons is a good way to open the door to negotiating a better deal.

Since a mortgage is a long term financial commitment, it is better to take your time when making a choice. There are many avenues available for information and assistance, including the U.S. Department of Housing and Urban Development. Use whatever means it takes to assure that you will be get the best home loan that is available for you.

Rosemary Rugnetta has been writing since 2010 for, a company that matches consumers with banks and lenders offering low mortgage rates. Previous to her writing career, Rosemary spent 13 years working hands-on in the mortgage industry as a mortgage loan analyst, certified mortgage underwriter, loan processor and property manager.


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