For some people the first sign that you are now an adult is when you get your first mortgage. Once you sign on the dotted line and take on the title of homeowner you truly leave the simplicity of childhood behind.
But are you ready for this step? It’s a big responsibility and a big opportunity. It’s also full of minefields that could seriously damage your financial future if you’re not careful.
Before you take the mortgage plunge, make sure you’re aware of these three things:
There’s more than one type of mortgage. Should you go standard or collateral, fixed or variable? This is very important. Getting the mortgage is the first step on the road to home ownership and you don’t want to start off on the wrong foot. Which brings us to point 2.
You need a broker. Yes, we live in the time of the internet when information is widely available and technically connections can be made without an intermediary—but choosing to go through the mortgage process without a broker is putting yourself in a dangerous position. A mortgage broker knows how to manage the lenders and how to get you the best deal. If you’re looking to get the lowest rates make sure you consult a quality broker.
Know your limits and your payment options. It may be tempting to take out a loan much greater than you’d originally intended—maybe to increase your house budget or fulfill a dream you have—but this early on in the game is not the time to be risky. Do not overburden yourself financially. Also, figure out your ideal payment schedule. Can you manage accelerated (bi-weekly or weekly) payments? This could help you save money by paying off the mortgage faster (thereby reducing interest charges).
Home ownership is an important step in people’s lives and you want to make sure you take the proper steps. Before you take on that loan and start your hunt for the ideal property you need to be honest with yourself about your wants vs. needs and who you have on your team. Once all the stars are properly aligned you will be ready to go find your first dream home.