6 Tips for Shopping for a Mortgage

Financing the purchase of your dream home is one of the most complex and, possibly, most frustrating, financial process you will ever have to endure.

You will need all the help you can get.

Here are some basics that can help you get started:

  1. Don’t bite off more than you can chew.  Look at your budget—your whole budget.  You need to estimate how much your whole life costs you and don’t look only at the financial measurements that the bank uses.

    You also need to have some savings for emergencies.  Plan ahead.  You will be having to pay your mortgage payments for the next several years.  Plan for the worst and hope for the best.

  2. Check your credit score.  Knowing your credit score and fixing it can help you obtain the best possible mortgage terms and interest rates.
  3. Shop around.  Look online and off.  Look at mortgage brokers, bankers, credit unions, and government financing.  Shopping around can save you thousands over the life of your mortgage.
  4. Understand the costs.  Shopping around means looking closely at the loan costs and fees, not just the interest rates.  There could be additional processing charges, repayment fees, discharge penalties, etc.  Know them all.
  5. Learn the risks and benefits of your loan options.  Mortgages have many features—fixed interest rates, variable rates, prepayment penalties, payment schedules, and more.
  6. Get advice from those you trust.  Ask those you trust for referrals.  Talk to me, a financial advisor or a lawyer about the mortgage you are thinking about getting yourself set up with.