Who needs a mortgage? Well, nearly everyone in North America who plans to own their own home. Interestingly enough, when you look at the Latin roots of the word "mortgage", you'll find two terms – mortuus which means death, and gage which means grip. So the term "mortgage" actually means death grip… pretty fitting when you think about it.
Nobody WANTS a mortgage, but most people do find themselves needing one in order to purchase a home. Very few people would consider themselves "mortgage experts" however – and most of those who would call themselves that are the ones selling a mortgage…which means that they're probably not your best bet for solid advice.
When looking for a mortgage, many creatively named fees tend to show up, such as an "underwriting fee", a "document review fee", "loan preparation or origination" fee, and more. These fees are unnecessary, and often not included in a mortgage broker's 'good faith' assessments beforehand. Depending on your broker, they may present you with the new fees in addition to your mortgage as indicated in their assessment, and give you the "take it or leave it" ultimatum.
By that point, most people are either tired and frustrated with the mortgage shopping process, or they feel that they have no other option, and are concerned that they may not get the house they've set their hearts on if they keep looking elsewhere, so they accept the additional charges.
In most cases, your best bet is to deal with a direct lender rather than through a middleman like a mortgage broker. Look for a no-cost, no-fee mortgage, and ensure that all fees are reflected on the "good faith" assessment performed by your lender before you accept the mortgage.
The last point to keep in mind is the length of the mortgage – a longer mortgage means lower monthly payments but more money out of your payment overall. So the faster you can afford to pay off your mortgage, the better – comparing a $300,000 mortgage at 6.5% with a 25-year term to the same mortgage with a 40-year term, the monthly payment would be around $2,000 and the total interest payments would be around $300,000 in the 25-year mortgage.
In the 40-year mortgage, monthly payments would be around $1,750, but the total interest paid out would top $534,000. So shorter is better. There are many pitfalls when finding a mortgage, but with some time and effort there are resources available to help you. Be sure to look around online for more info on effective mortgage shopping.
Seymore Hennigan has worked in finance for many years. When he is not crunching numbers or advising his family and friends on their investments, he writes for mortgageguide101.com – an online guide to mortgage lenders, interest rates, mortgage calculators and more.
No comments:
Post a Comment