You’ve been saving and watching that down payment grow in the hopes of realizing your dream of getting the keys to a place of your own. When the time comes to start looking at the financial end of home ownership, It’s best to temper your excitement and start looking at all the issues with a clear calm head as you move forward and start asking important questions like what mortgage can I afford?
There are a few industry related snares out there you’ll need to avoid and learning how to negotiate your first mortgage gives you the right information to sidestep most issues. For example, did you know quite often the initial rates the banks offer and the ones flashing at you online are called ‘sucker rates’ for a good reason? Those are usually loaded with restrictions on lump sum payments and other caveats you’ll only find if you scour the fine print with a magnifying glass.
Having a good strategy is job number one and that generally means hiring a professional mortgage broker that can walk you through the advantages and disadvantages of fixed and variable rates as well as the other terms you’ll find. Don’t make a rookie mistake here and automatically take on a five year term because you like the idea of knowing exactly what you’ll owe every month without carefully going over the terms first.
Remember you have leverage—the mortgage world is a highly competitive industry and you can save literally thousands of dollars in interest payments on your first mortgage if you know your stuff. Watch out for those large break fees when you leave a mortgage early and remember you need to set aside money over and above the cost of the mortgage for utilities, maintenance and even repairs where necessary.