7 Things You Must Know About Real Estate Mortgages...
Before You Buy A Home!

1. All real estate mortgages are not created equal.

There are several different types of real estate mortgages, that vary based on interest rates, payment and repayment terms.

• Your monthly payments remain thesame during the entire length of the mortgage. There will beno variations in monthly payments, regardless of changes ininterest rates and inflation.

• You will often receive alower initial interest rate, but your monthly payment amountcan rise and fall as interest rates fluctuate (within certaincaps or limits).

• You may be offered a low interest rate, but it will hold for a limited time. After that, the balance of the mortgage will be due, or you will need to refinance.

2. Get Pre-Approved!

Pre Approval is easy and can give you complete peace of mind when shopping for your new home. Your Lender can provide you with a pre-approval at no cost and obligation and it can all be done quite easily over the phone.

More than just a verbal pre-approval from your Lending Institution, a written pre approval is as good as money in the bank.A written pre-approval involves a completed credit application, and a certificate that guarantees you a real estate mortgage to a specified level and interest rate when you find the home you're looking for.

"A benefit of being pre approved for a mortgage loan is that itgives the prospective homebuyer additional bargaining leveragewhen competing with other prospective buyers for a home."

"A home seller may be more likely to accept an offer from apre-approved borrower because the seller knows the buyer can geta loan than from another bidder, who may be exactly the same infinancial qualifications and offer, except that he lacks thepre-approval." says Frank Nothaft,PhD, vice president and chief economist for Freddie Mac, thestockholder-owned corporation established by the United StatesCongress in 1970 to create a continuous flow of funds to mortgagelenders in support of homeownership and rental housing.

3. Know what monthly dollar amount you feel comfortable committing to paying.

When discussing pre-approval with your Lending Institution, find out what level you qualify for, but also pre-assess for yourself what monthly dollar amount you feel comfortable committing to. Your situation and circumstance may give you a pre-approval amount that is higher (or lower) than the amount of money you would want to pay out each month.

By working back and forth with the lender, to determine what the monthly amount is, and what value of home this translates into at today's rates, you won't waste time looking at homes that are not in your price range.

Use this Mortgage Payment Calculator and figure out how much house you can afford.

4. Think about your long term goals and expected situation to determine the type of real estate mortgage that will best suit your needs.

There are a number of questions you should be asking yourself before you commit to a mortgage:

1. 1. How long do you think you will own this house?
2. 2. What direction are interest rates going in and how quickly?
3. 3. Is your income expected to change (up or down) in the near future, impacting how much money you can afford to pay towards your mortgage?

5. Make sure you understand what prepayment privileges and payment frequency options are available to you.

More frequent payments (for example weekly or bi-weekly) can literally shave years off your real estate mortgage. Simply by structuring your payments so they come out more frequently, will significantly lessen the amount of interest that you will be charged over the term.

For the same reason, authorized prepayment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay and could shorten your payment term considerably.

These two payment options can cut years off your real estate mortgage and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in, so make sure you ask the proper questions.

6. Ask if your real estate mortgage is both portable and/or assumable.

A portable real estate mortgage, where available, is one that you can carry with you when you buy your next home and avoid paying any discharge penalties. This means that you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home.

An assumable mortgage is one that the buyer for your home can take over when you move to your next home. This can be a very powerful tool at the negotiating table making it much easier and more desirable for a buyer to buy your home, and again, saves you any discharge penalties.

7. You should seriously consider dealing with a Mortgage Expert.

Consider dealing only with a professional who specializes in real estate mortgages. Enlisting their services can make a significant difference in the cost and effectiveness of the real estate mortgage you obtain. For example, they can make the process faster thereby avoiding costly delays. Typically there is no cost or obligation to enquire.