Crucial Questions to Ask When Shopping Around for a Mortgage

Shopping around for the most advantageous mortgage product is a crucial endeavor when planning on purchasing a home. There is a lot at stake, and the odds of losing out financially for the duration of the loan is huge if the loan product turns out not to be what you had anticipated. Most importantly, there are so many different loan products on the market; it makes good sense to carefully and diligently shop around before committing and signing on the dotted line. Consumers can protect themselves easily by asking a number of germane questions that quickly reveal if a loan is truly a good deal today, tomorrow and perhaps also for the 30 some odds years it will be in existence.

One of the most important questions to ask deals with the monthly payment you can afford. It is immaterial how much money the bank will lend you and prequalify you to borrow; instead, you must honestly consider how much money you can afford to spend on housing each month. In some cases the monthly mortgage keeping is in keeping with the amount of the monthly payment you can afford, but in other cases the cost of homeownership when combined with the cost of upkeep might be more than you bargained for. In such cases you will be well served to borrow less than the bank is willing to lend you, even though this means having to buy less house.

Once you determine the amount of the monthly mortgage payment you can afford, it now comes time to shop around for a mortgage that will not only accommodate this payment, but also offers you the kind loan that is attractive and costs the least amount in interest. Interest rates changes frequently, and before signing up with a bank or credit union, you will be wise to ask them about their current mortgage rates. While most banks are within the same ballpark, there are some that have nonetheless different rates, and it behooves you to find the one with the lowest mortgage rate possible. Since these charges fluctuate frequently, it is wise to research the economic indicators that influence them – generally treasury notes and bonds – and ensure that you are applying for a mortgage when the rates are lowering or going down, rather than peaking.

The final crucial question to ask yourself when shopping around for a mortgage involves the length of time you plan on staying in the home. If this is to be a transition home only, and you anticipate a significant increase in income and therefore also buying power, you may be better served in a loan that charges the least amount of money up front and then, when the payments are set to increase to make up for lost time, you will get rid of the loan and the property. This is especially useful if you are thinking of moving into a different home, have a home that is being built, or simply wait for life events to take place that will take you to a different locale altogether. The money you save during the initial low early years can be put away and saved for a down payment on a different property.