Published On: Fri, Feb 20th, 2015

Vital Things You Should Know About Getting a Mortgage

Getting a mortgage is one of the most important and complicated tasks you’ll ever do in your life. Some people don’t think too much about the vital information surrounding mortgages; they simply pick a bank that will give them a loan and follow instructions. This can cause all kinds of problems down the line. Here are the vital things you should know about getting a mortgage:

Mortgage

You Must Avoid Interest Only Loans

An interest only loan is probably not the right decision to make for you, or anybody for that matter. The only time you should ever consider this kind of loan is if you plan to move in a short amount of time. When you’re only paying interest, you aren’t building up any ownership in your home.

There’s More than Just Your Mortgage Payments to Worry About

There’s way more to pay than just your mortgage payments. The fees you’ll need to face will seem neverending. To avoid any nasty surprises, get an estimated statement to show you your total expected fees. Here are some of the fees you’ll need to ask about:

  • Prepayment penalty – the money you’ll have to pay if you pay your loan off early.
  • Underwriting.
  • Documentation.
  • Title search.
  • Credit evaluation.
  • Application fee.

Junk fees can be negotiated. These include things like the trustee fee, schedule fee, inspection fee, and computer fee to name just a few.

The Mortgage Industry is Not Regulated

The mortgage industry is unregulated, which means that getting your loan from a bank/mortgage broker will be a different experience. Bear in mind that you’re not obligated to accept any last minute changes, so watch out for anyone who may be trying to bait and then switch up your deal at the last minute. Here are some signs that you should walk away from this deal sooner rather than later:

  • You feel pressured to borrow more than you need.
  • If you can’t get copies of all of the documents you’ve signed.
  • Being asked to sign blank forms.
  • Anything that makes you feel pressured or uncomfortable.

Dishonest lenders know that it’s harder to walk away further down the line, and will be counting on it. You only want to work with honest companies looking for qualified mortgage leads to work with legitimately.

You Should Never Pay the Minimum Loan Payment

Paying the minimum loan payment could be you owe more than your home is valued at. You should be paying the full interest payment to get the best results!

You Can Get Your Mortgage From a Number of Sources

You could get your mortgage from a number of different sources, so be sure to shop around first. Here are some options you should consider:

  • Specialised mortgage companies.
  • Finance houses.
  • Insurance companies.
  • Banks.
  • Building societies.

Just Because You’ve Been Accepted Doesn’t Mean You Can Afford It

You will usually get accepted for a higher mortgage than you actually need. It’s not the mortgage lender’s job to work out how much you can afford; that’s your job. Make sure you only accept offers you can afford.