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Mortgage

How to choose a mortgage?

While a mortgage can help you fulfill a long cherished dream of owning a house, choosing the right type of mortgage has a lot to do with your piece of mind in the future, since a mortgage is a long-term financial commitment. You need to make one of the most important decisions of your life and it better be an informed choice. You do not wish to get into an uncomfortable situation with a heavy and burdensome mortgage which remains with you for the next 10 to 15 years if not more. The selection process of the right type of mortgage can lead you to much confusion, especially with the kind of variety that is available today. Though it is joyous to own a home or a commercial property instantly with the help of a mortgage loan, the first considerations you need to make are:

Your income in the future.

Your growing financial needs (expanding family, relocation, etc)

In case you find yourself sitting on the horns of dilemma looking at the plethora of mortgage options, you could also take the help of an independent mortgage advisor who would study your specific needs, your financial status, assess your future income probabilities and then advise you on the type of mortgage loans would suit you best and will not hurt your pocket adversely in future. Financial advice from loan officers in a bank or real estate agents should be avoided as they can be very biased. Here are some points to ponder when selecting a mortgage loan:

Your first task is to become completely familiar with the different types of mortgages available. Each mortgage option has its advantages and disadvantages and you would like to know them beforehand. Know about the interest rates – should you go for fixed rate or adjustable rate of interest?

If you know what you do not need in a mortgage plan, it will guide you to the best mortgage plan, which will suit you. Weigh the pros and cons of each type or mortgage to find the one which suits you best.

Chalk out how much money you can afford to pay back each month as loan repayment. Keep in mind your daily compulsory expenses as well as any impending large expenditure which you can foresee like a child attending college in another 2/3 years, etc. Best is to draw out an income and expenditure plan and be realistic about both areas.

Do a comparison analysis of all the mortgage rates and terms before you take a decision? There are enough online tools to calculate interest rtes, monthly installment rates, etc.

One of the most important areas of mortgage selection is the choice of the lending institution from where you are going to take the loan. Do a background check of the company before any deal to see whether there are any complaints against them in the market. It is a wise idea to deal with a financial institution with which you are already familiar, like your own bank or credit union. You could even check with the company where you work, if they have a tie-up with any bank or lending institution for disbursing loans to their employees.

Choose the tenure of your loan carefully. Based on the rate of interest, you could be paying back the loan for a long many number of years. A loan officer could be of help in deciding which tenure will suit your repayment plan best.