- April 29, 2017
- Posted by: steve
- Categories: first time buyers, mortgage articles, mortgage checklist
Are you getting ready to apply for your first mortgage? We can help. Use this mortgage checklist to make sure you have everything you need.
Getting a mortgage can be quite stressful. However, it doesn’t have to be, especially if you are well-informed.
Moving into a new house is one of the biggest investments most people make. Often, a new home usually means a new city, or neighborhood, a new beginning.
We created a mortgage checklist to help you start off on the right foot.
Read on if you want help finding the perfect mortgage while staying stress-free.
Find the Best Rates for Your Mortgage
Don’t be shy. Ask questions and negotiate.
The lender doesn’t want to lose you as a client. It’s in his interest to make you a better offer once you start negotiating.
You can ask how many lenders your mortgage broker spoke with. Also, inquire about how many banks and credit unions he or she spoke with as well.
You should only ask mortgage brokers these questions. Representatives that work in banks and credit unions don’t negotiate with lenders.
Rates sometimes drop. Therefore, you should also ask your mortgage broker if you will be notified and how you can make sure you don’t miss on discounted rates.
Find Out What Extra Payments Are Necessary
Extra payments annoy everyone. This is why it should be on your mortgage checklist. If you know from the start what other expenses you will have to deal with, your life will be a lot easier.
One of the questions that should be on your mortgage checklist is the following: How much you can prepay without paying a penalty?
Also, you should ask when you can make the pre-payments. Ideally, lenders should allow you to pay in advance at any time.
How much the payments will increase every year is also important, along with how often you can pay your mortgage.
Some give you the option of paying bi-weekly, weekly, or monthly. You can also opt for accelerated payments where you can pay your mortgage faster.
Instead of paying a mortgage for 22 years, you can pay it off in 20 years if you make some extra payment every year.
The Penalties Mortgage Checklist
Penalties should not scare you. After all, if you know what you’re getting yourself into, it’s a lot easier to figure it out what you can afford.
Few feel comfortable asking questions about penalties. However, it’s important to know what will happen in case you can no longer pay your mortgage.
One of the must-ask questions on your mortgage checklist is when you can break your mortgage and under what circumstances.
In certain situations, you can simply pay a penalty and move on. In other cases, you will have to sell the property to get out.
It all depends on the lender. This is why you should negotiate and explain what you can do in case an emergency arises.
If you have the option to pay a fixed-rate penalty, you should know that the penalty is going to be around three or four months of interest.
Avoid mortgages that have penalties based on other rates than the current ones.
Think About the Resale Value of the Property
The real estate market could change in a few years. Therefore, it might be profitable for you to sell your property.
You should consider your job, as well as other factors that might make you consider moving to another place. No matter the reason why you want to leave your property, you should know the resale value of the property.
For example, older homes or homes made out of wood might drop in value over the years. Some mortgages involve giving some of the money back if you pay a larger amount of money at first. If you’re paying a premium rate, you’ll be able to take your money back in case you want to move.
Always ask your lender if that’s the case for your mortgage too. Premium rates usually mean you can take the money back. Just make sure your mortgage has that option.
Ask About Your Refinancing Options
Refinancing flexibility is very important for your future. This is why we put it on our mortgage checklist.
You never know how your income will look ten years from now, so you need to prepared for anything. Some want to pay the mortgage faster, while others want to negotiate smaller rates.
Another question that should be on your mortgage checklist is whether you can increase your mortgage any time you want while keeping your discounted rates.
Many lenders make you pay a penalty for trying to increase your mortgage. If you’re on the other side of the spectrum, you could ask questions about how much you can extend your mortgage term.
Watch out for lenders who accept extending your mortgage term but also charge you other fees.
Some lenders offer the option to fix your payment. That means that if your monthly rates rise, more of the money goes toward interest.
If the rates are lower, less of your payment will go toward interest.
Special Refinancing Features
You never know where life takes you. This is why you should plan your mortgage checklist in advance. Some of us switch jobs, move elsewhere, or simply go trough a rough patch. This is why you have to be sure that you will keep your property no matter what.
Ask if you can apply for a hybrid mortgage. This type of mortgage allows you to pay a part of the mortgage with a fixed rate.
The rest of the mortgage will have rates that vary. Amortization is also important.
Ask if the lender will give you the amortization that suits your needs.
Usually, the minimum amortization starts at 18 years. The maximum amortization would be around 35 years.
Payment Methods, Banks, and Credit Unions
Since it’s so much easier to pay your mortgage online, make sure you ask about what options you have.
Some lenders give you the option to check your balance online. In some cases, you can also make prepayments without taking trips to the bank.
Usually, the major banks, as well as other big names that happen to be lenders who aren’t banks, do offer an online platform.
If you’re comfortable with making payments online, this could be the perfect payment option for you.
For some, taking a mortgage from a bank or a credit union makes them feel more comfortable. This is especially the case if they can visit an office where they can ask questions.
These days, you can use your phone or your email to gather more information. However, some people still prefer speaking to bank or credit union representatives.
You shouldn’t fear small lenders either, especially these days when it’s so easy to conduct a background check on everyone.
Ask About Emergencies
Perhaps the most important part of your mortgage checklist is asking what happens in case you will deal with emergencies in the future.
Health issues, unemployment, or a tragic loss in your family can take a toll on your finances. This is why you should make sure that your mortgage won’t stress you out too.
Some lenders allow you making some prepayments that will guarantee that you won’t lose anything in the future. This is important in case you can’t pay the mortgage for a few months.
Also, if you’re thinking about skipping payments instead of making a prepayment, in the beginning, keep in mind that you will have to pay penalties.
It’s more affordable to make a prepayment than just skip payments in the future and face high-interest rates.
Purchasing life insurance is an important decision. Ask your lender if you’ll have some benefits that come with it.
One question that should be on your mortgage checklist is whether you can switch the insurance to a new lender without losing any money.
Some lose their premium insurance as they move to another lender. Therefore, asking about your options is quite important.
Also, as you get older, your insurance premiums become more expensive. This means you should also inquire about insurance that is not tied to any bank or credit union. By doing so, you can keep your insurance if you switch lenders.
This Mortgage Checklist Can Help You Save Money and Time
We created the mortgage checklist to make it easier to find everything you need to know in one place.
You might have to read the article a couple of times to digest everything. But once you understand every concept, you’ll be armed with enough knowledge to get the best out of any mortgage.
Many people lose money simply because they don’t ask enough questions.
This is why we made a list of questions you should ask when you are searching for an affordable mortgage.
If you found our mortgage checklist helpful, feel free to take a look at our blog. We have a whole section dedicated to mortgage articles.
We can also help you calculate your mortgage with our mortgage calculator.
If you have any questions, or you have some troubles understanding what happens in certain situations with your mortgage, don’t hesitate to contact us.