For some people, getting any kind of mortgage can feel like a process of auditioning for a part in a big Hollywood movie. If you get it, it means big and positive changes for your life, but there’s also a lot of rejection around. These people forget that the mortgage lenders should be feeling just as “on the spot” as you do, because they are also competing for business in a tough market.
In what is a varied and tricky marketplace, then, how can we be sure that we’re getting the best-possible mortgage deal? Below are some tips on choosing the best mortgage for you.
Tip 1: Keep Things Ethical
Our first tip is to hire an ethical mortgage broker to get into your first home sooner. What you need to guarantee the best mortgage is an ethical operator that will only offer you mortgages that are affordable and manageable to you. Some lenders use more expedient offerings that in the short term seem great but over time become complicated or cumbersome for the mortgage holder, and can result in serious problems. Nobody wants a repeat of the 2008 crisis.
Therefore, work with mortgage brokers on the Central Coast who have a clear focus on finding the right mortgage for you, even if it’s less expedient for them.
Tip 2: Figure Out Realistic Affordable Numbers
Before you agree on a final mortgage deal, you have to crunch the numbers and be sure not just that you can afford the payments in the short term, but in the longer term as well. Does the mortgage leave you with enough income to set aside for an emergency fund, for example? Such a fund could be critical for continuing to make payments on time in the event that you lose your job or otherwise find yourself without income for a time.
Going over the numbers, and then going over them again is essential when looking at mortgages. These are commitments of 10 to 30 years. It has to be carefully planned.
Tip 3: Don’t Forget Added Costs
The monthly mortgage payment isn’t the only thing you’ll be paying, and it’s important to remember the other fees that can come up: interest, property taxes, mortgage insurance, and any association dues/fees if your new home belongs to any kind of local association.
Tip 4: Learn Everything About the Interest and Other Conditions
If you’ve followed the first tip, you’ll have an ethical lender guiding you to the right mortgage who will spell out all the terms and conditions in clear, concise and unambiguous terms. This is very important because you can’t afford to not understand any part of your mortgage. Making mistakes that could violate the terms and conditions can see you incur additional costs, and also have your credit rating hurt.
Therefore, the best mortgage for you is the one that is the least mysterious and that you can understand thoroughly.
Tip 5: Understand the Difference Between Fixed Rate and Adjustable Rate Mortgages
You might get this knowledge from following the third tip, but the style of mortgage, either fixed rate or adjustable rate (ARM), is a very important factor that not enough people know about before going into their search. It’s best to know the difference going in, and then get your lender to explain the exact conditions of whatever type they are offering you.
Fixed rates are easy enough to understand, but adjustable rates can be confusing. They are often quite tempting because of low interest for the first few years, but many get caught out by rising interest rates later on, which can be hard to handle. If the interest payments become too much, it can result in payments being missed and foreclosure becoming possible. Therefore, take time to study the pros and cons of each type.
