Now that you’ve decided to buy a home, it’s time to consider
how you’ll pay for it. Mortgages are extremely complicated, and selecting the
wrong one could seriously jeopardize your future. Here are a few pointers for
choosing your mortgage wisely.
Get to Know the Players
Ask a friend or relative who has recently gotten a mortgage
if they would recommend their lender. Have your realtor or someone else who
deals with mortgage lenders regularly (a financial adviser, attorney, etc.)
help you create a list of lenders. Search the web and research these lenders
extensively, being sure to push past the advertising and investigate fees,
lock-in periods, and qualification requirements.
Go Long
Used to be the emphasis when it came to mortgages was on
paying them off as soon as possible. Today, the debt the average person will
accumulate due to credit cards, student loans, etc. means it’s better to opt
for the 30-year mortgage instead of the 15-year. This way, you have a lower
monthly payment, with the option of paying an additional principal when money
is good.
Take the Extra Point
When selecting a mortgage, you usually have the option of
paying additional points (a portion of the interest that you pay at closing) in
exchange for a lower interest rate. If you plan to stay in the house for a long
time—and given the current real estate market, you should—taking the points
will save you money and ease the burden you’ll bear down the road, when you’re
investing in a family.
Draft a Pro
If researching mortgage lenders sounds overwhelming, you
might consider hiring a mortgage broker to do it for you. A mortgage broker is
an independent contractor who pairs you with lenders by scouring available
loans to find the one that best fits your needs. As with your realtor, be sure
to research your mortgage broker upfront and get everything in writing.
