The 9 things you must know before you buy a house!

The 9 things you must know before you buy a house!

Before putting all you money into mortgage payments, please consider the
following 9 important issues. By considering these important financial issues,
you will be able to make your payments work much harder for you.

1. Get pre-approved BEFORE you look for your new home

Of all the steps to de before you buy a home, the pre-approval part is the
easiest. One of it's benefits: It will give you complete peace-of-mind while you
are looking for a home. The best part, it's usually free. Your local lending
institution can give you a written pre-approval with no obligation on your part.
Getting pre-approved means money in the bank! Being pre-approved means that you
have a guarantee of obtaining a mortgage up to a specified level.

2. Know what level of monthly payment are you comfortable with

When your are discussing your pre-approved mortgage with your lender or your
lending institution, you will find out up to which level you can borrow. You
must also pre-assess what amount of dollars you want to spend each month on your
home without getting uncomfortable. Your financial situation could give you a
higher level of pre-approval than what you could feel comfortable paying each
month. Once you have set that amount, you will know the price range of the house
that you should be looking for.

3. Select the type of mortgage that will best suit you
Before you commit to a certain type of mortgage, there are a number of
questions you should be asking yourself. Mainly: For how long do you thing you
will own your present house? Are the interest rates going down or up? Will your
earnings change in the near future, will that change have any influence on your
future payments? Once you know the answer to these questions, you should be in a
better position in choosing the appropriate type of mortgage you should be
looking for.

4. Payment frequency options

Accelerated weekly and bi-weekly periodic payments can save you thousands of
dollars in interests payments. If you plan your mortgage periodic payments well,
you will significantly lessen the amount of interest that you will be charged
over the term of the loan.

The best trick is the accelerated bi-weekly mortgage payment system. You pay
every second week half the amount of what should have been your monthly mortgage
payments. By using this system, at the end of the year you will have paid the
equivalent of 13 monthly payments.

Note: Not all mortgages are of the accelerated bi-weekly type.

5. Authorized pre-payment
Another system that can greatly reduce the total interest amount you will
have to pay is the authorized pre-payment system. By paying off a certain
percentage of your mortgage, or by increasing the amount that you pay monthly
will greatly reduce your mortgage costs. By using an authorized pre-payment
system you can have a major impact on the number of years you will have to pay
your mortgage.

Note: Not every mortgage has the prepayment option built in.

6. Portable mortgage
A portable mortgage permits you to use the same mortgage when you purchase
your next property. Basically, under certain conditions, the lender will
authorize you to change home mortgages without any penalties and without having
to go through the entire mortgage process again.

7. Assumable mortgage
An assumable mortgage is a mortgage that you can transfer to the buyer of
your house. It is a very rare type of mortgage, but a very powerful selling
point for your buyer. Furthermore, this type of mortgage comes without any
penalties if it is assumed.

8. Work with a financial expert
Before you choose your mortgage type, the lender or the lending institution,
get the insight of a professional. Ask a mortgage specialist. A mortgage
specialist will usually answer your questions at no cost or obligation and, if
you do use his or her services, you will probably get your mortgage faster and
with better conditions than if you didn't.

9. It's usually better to choose a good house instead of a good deal
Here is an example. In 2004, two houses were sold. One for $320,000 and the
other for $610,000. One was at a major road and the other one, not far from it,
in a reasonably quiet street. Both houses were purchased by respective owners
around 1982. The one at a major road was paid around $70,000 while the other was paid around $90,000. The owner of the later home not only got higher
appreciation from his house, he also enjoyed a quieter life for 22 years.


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