Shopping for mortgages can be a very complex and confusing process—kind of like shopping for a high rise confo for sale in Downtown Boston–especially if you’ve never used these funding products before. There are a wealth of terms, features, and numbers that must be reviewed before you can accurately assess the overall value and appeal of any loan. Following are several numbers that every borrower should consider before committing to a home loan.
1. The Overall Cost of the Loan
It is vital to have a clear understanding of how much you’ll pay for your loan overall. After all interest payments, fees, and secondary mortgage costs are factored in, the resulting number will tell you how much you’ll be paying to buy your home overall. It is also the best number for gauging the overall value of the funding product that you’ve decided to use.
2. Loan Term
The loan term defines the length of the loan. A financial commitment that might be acceptable right now could prove less than ideal in the future. Buyers should have a clear understanding of their long-term financial goals before signing mortgage documents. This will limit the need to refinance by helping people lock into mortgages that will continue to work well for them further down the road.
3. Interest Rates
With a fixed rate interest rate, the amount that a homeowner must pay in interest will remain static over the lifetime of the loan. Adjustable rate mortgages, however, lead to increased spending at various intervals. Although fixed rate mortgages are generally viewed as being best, there are instances in which adjustable-rate products could be better suited to the individual. If you’ve chosen an adjustable rate mortgage, take careful stock of the adjustment schedule and make sure that each increase is in line with your spending abilities.
4. Pre-Payment Penalties
Pre-payment penalties are fees that borrowers must pay each time they make loan payments ahead of schedule. Not all mortgage loans have pre-payment penalties and thus, this is definitely a feature to look out for as you shop around. Pre-payment penalties make it difficult for buyers to pay their loans off early without significantly increasing the overall costs of these funding products.
What Else Should I Know?
If you’re a first-time homebuyer, consider working with an experienced agent who can help guide you through the process from start to finish. The right real estate agent in Downtown Boston will ensure you’re presented with all your options and help you determine what’s right for you and you’re long-term goals. Check out our inventory online or give us a call at 617-720-5454 to make an appointment.