Think about it. You’re going to do something that you’re going to pay for, for quite a long, long time. Yes, we’re talking about the mortgage you are going to take in order to get possession of the property you’ve been having your eye on for quite some time.

Will you be paying for something that has proved helpful to you? Or will you be finding it one of the greatest mistakes you’ve ever made, and for which you now must pay a heavy price?

Well, it’s up to you. Watch your step. Look out for the pitfalls. And knowing where to find them is half the battle won. The time you spend in preparation will be more than compensated for in the money you can still leave safely in your bank.

1. Don’t be in a hurry to find a lender. Like all your other moves, research this one, and find a reputable lender; one who can help you make suitable sound business decisions; one you can trust.

2. Don’t let low rates be the criteria for choosing a lender. Be very sure about the term length of an advertised rate. Have it in writing. Will you have enough time to close on your loan? In spite of their promises, certain companies may try to change their rates before closing, citing the expiration of your ‘lock-in’ rate as just cause.

3. Do not settle for a program just because it offers special low interest rates. Your lender should be able to advise you as to the program that suits you best. Ask him to qualify his suggestion with specific reasons.

4. Don’t necessarily flow with tide. Just because something has been around for a longer time and is more conventional, it does not necessarily mean that it is always better. This is especially true when choosing between a Fixed Rate Mortgage (FRM) or an Adjustable Rate Mortgage (ARM). What you have to consider is how long you expect to live in this particular place. Only if you intend living at this property for an extended period of time should you consider settling for a fixed rate mortgage.

5. Don’t miss the bus. Very often people wait too long, hoping that rates will dip further. There is no guarantee that this will happen. They could rise instead. These floaters will then be forced to settle for a much higher interest rate. Be alert and watch out for the signs. Sources of information such as the newspaper or the evening news can be accessed.

6. Don’t delay negotiating problems. It will not be in your interest to do wait until closing to negotiate them. Many more unforeseen problems will arise should you do this. Discussing problems and their solutions before closing will allow both, you and the buyer, to study and analyse them and to come up with suitable options

7. Don’t forget closing costs and hidden fees. Besides your down payment you will be asked to pay certain fees and closing costs when making your final transaction. These could include inspection, _____ –notary and document preparation fees. Do not hesitate to clear up any doubts you may have regarding them. Closing costs can usually be anything between 2% and 6%. Your lender must give you a “Good Faith Estimate“, which will list all your expected costs. Thus there should be no unpleasant surprises during closing.

8. Don’t close early on in the month. When you make your mortgage payment you will also be paying interest accruing from the previous month. However, when you close you will be charged prepaid interest for the date on which the loan has been recorded through the end of that month, by your lender. You can lower your closing costs by closing later on in the month as this will lower the amount of prepaid interest charged to you.

Have these tips helped you? Do you feel a little more confident about taking out a mortgage now? We sincerely hope so. In case you feel you would like to know a little more or have some questions about you can contact us at any time.