6 THINGS YOU MUST KNOW BEFORE YOU BUY

1. You can, and should, get pre-approved for a mortgage before you go looking for a home Pre-approval is easy, and can give you complete peace-of-mind when shopping for your home. Mortgage brokers can obtain 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 a 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. Know what monthly dollar amount you feel comfortable committing to When you discuss mortgage pre-approval with your mortgage broker, find out what level you qualify for, but also pre-assess for yourself what monthly dollar amount you feel comfortable committing to. 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. By working back and forth with your mortgage broker to determine what this monthly amount is, 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. You should be thinking about your long term goals, and expected situation, to determine the type of mortgage that will best suit your needs There are a number of questions you should be asking yourself before you commit to a certain type of mortgage. How long do you think you will own this home? What direction are interest rates going in, and how quickly? Is your income expected to change (up or down) in the near term, impacting how much money you can afford to pay to your mortgage? The answers to these and other questions will help you determine the most appropriate mortgage you should be seeking.
   
4. Make sure you understand what prepayment privileges and payment frequency options are available to you. More frequent payments (for example weekly or biweekly) can literally shave years off your mortgage. Simply by structuring your payments so they come out more frequently, you will significantly lessen the amount of interest that you will be charged over the term of the mortgage. For the same reason, authorized prepayment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay. For example, a mortgage with a “15 and 15” prepayment privilege gives you the right to pay a lump sum of up to 15% of your outstanding balance. In addition, under a “15 and 15”, once a year you are entitled to request an increase in your monthly payments by up to 15%. This can also be rolled back once during the year (although not lower than your original obligation) if you find that your situation changes. 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. Make sure your mortgage is both portable and assumable A portable mortgage is one that you can carry with you when you buy your next home. This means that you will 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.
   
6. You should seriously consider dealing with a Mortgage Broker Mortgage Brokers are the best kept secret in the industry. While enlisting their services can make a significant difference in the cost and effectiveness of the mortgage you obtain, you never pay the broker for his or her services. This valuable service is extended to you at absolutely no cost and no obligation.