Choosing the right mortgage is very difficult and overwhelming especially to first time buyers. Because this involves quite an amount of money and long term commitment on payment, you should make sure that you have made the right decision in choosing the best mortgage for yourself. However, this can sometimes be a bit confusing because of the many factors influencing your decision. From the advice of your friends and family to the numerous suggestions that your mortgage broker would give, you’re likely to feel overwhelmed with information overload.
Aside from information overload, the mortgage laws are constantly changing because of the innovation of the products that are now being available on the market today. This will certainly affect your mortgage selection because you have to adjust your decision depending on the applicable law and provisions that are under the scope of your chosen mortgage, so that you have more freedom and advantages in the payment of your mortgage.
Fortunately, there are some helpful tips you can follow to help you make your mortgage selection much easier and less stressful.
- Calculating Your Net Worth
The first thing you need to establish is your net worth. You should compute all of your monthly expenses and deduct it from your monthly salary so that you can compute the excess money you can allot for your mortgage.
This will establish your capability of paying a mortgage. This will also establish your overall budget.
- Know Which Type of Mortgage Will Fit Your Financial Status
You can either choose a fixed or variable mortgage rate, depending on your preference and financial capability.
A fixed rate mortgage has a fixed rate for a certain time, say, five years, depending on your contract. This is advantageous if you want your mortgage to be the same even as time goes by: even when inflation strikes.
A variable mortgage, on the other hand varies depending on the prime rate of the lender. This will depend on the market performance; hence, you cannot have security on your monthly mortgage payments. This, though, is beneficial if the prime rate goes down as you can save money from your monthly mortgage fees.
- Compare Mortgage Rates
After you have decided what kind of mortgage you want to have, it’s time to do some research. You can look for mortgage companies and start comparing rates in order to see which one offers the least rate. You should also check for other benefits that other mortgage companies provide so you can take advantage of them.
- Consult with a Mortgage Specialist
It is best to speak with a mortgage specialist to make sure you can afford your selected mortgage. This is also helpful in having extensive knowledge about the mortgage laws that will govern your mortgage contract.
By hiring a mortgage specialist, you will be able to get the best mortgage deal and take advantage of all the benefits that your mortgage could offer.
Whatever kind of mortgage you are looking for, you should make sure that you don’t fall for marketing tactics that will make you grab something you cannot ultimately afford. Be wary of deals that seem too good to be true because they might have a catch. Make sure to discuss everything first with your mortgage broker before signing any papers.
