Mortgage Regulations Have Changed
Mortgage rules have evolved a lot in recent years, giving you more options than ever. Small tweaks in how you shop for a mortgage or structure it can make a huge difference—saving or costing you thousands of dollars and even years of payments.
Get the Right Information
Whether you’re buying your first home or moving to your next one, it’s so important to understand the factors at play.
Research has shown that most homebuyers make 6 common mistakes when shopping for a mortgage. These mistakes can have a big impact, but when handled the right way, they can lead to a mortgage that costs you less and gets paid off faster.
6 Things You Must Know Before Getting a Mortgage
Before committing your hard-earned money to monthly mortgage payments, it’s important to consider these six key points. Taking the time to think through these areas can help you make your payments work harder for you.
1. Get Preapproved Before House Hunting
Getting preapproved for a mortgage is easy and gives you peace of mind while shopping for a home. Your local lender can provide you with written preapproval at no cost or obligation, often with just a simple phone call. Unlike verbal approval, written preapproval is like having money in the bank. It includes a completed credit application and a certificate that guarantees your mortgage up to a specific amount when you find the right home.
2. Know What Monthly Payment Works for You
While preapproval tells you what you qualify for, it’s also important to decide what monthly payment amount you’re comfortable with. Your preapproval might be higher (or lower) than what you’d prefer to pay each month. Work with your lender to figure out the right monthly amount for you and what home price that translates to at current rates. This way, you won’t waste time looking at homes outside your budget.
3. Think About Your Long-Term Goals
Consider your future plans when choosing a mortgage. Ask yourself questions like: How long do I plan to stay in this home? What direction are interest rates heading? Is my income likely to change soon? These factors can help you determine the best type of mortgage for your situation.
4. Understand Prepayment Privileges and Payment Frequency Options
Paying more frequently—like weekly or biweekly—can significantly reduce the interest you’ll pay over the life of your mortgage, potentially saving you years of payments. Similarly, making prepayments or increasing your monthly payment amount can shorten your mortgage term and save you thousands in interest. Not all mortgages include these options, so be sure to ask about them.
5. Check if Your Mortgage is Portable or Assumable
A portable mortgage allows you to take your mortgage with you when you move, avoiding discharge penalties and the hassle of reapplying. An assumable mortgage lets the buyer of your home take over your mortgage. This can make selling your home easier and save you penalties. Both features are worth exploring with your lender.
6. Consider Working with a Mortgage Expert
A professional who specializes in mortgages can make a big difference in finding the best mortgage for you. They can streamline the process, avoid costly delays, and help you get the most effective mortgage option—all at no cost or obligation to you.