Smart shopping for mortgage

More and more new products are available to mortgage borrowers than ever before. With so much variety to choose from, borrowers find the selection process increasingly confusing and difficult. Which features are good and which ones are not? Which options will truly save borrowers money, and which ones benefit lenders?

Every lender promotes its mortgage package as "the best for the borrower." Yet with the large amounts of money involved today, borrowers can't afford to make a mistake, or they may later become disenchanted with what the mortgage offers. Mortgage borrowers are in a quandary. What should they do? These four things:

• Look for a mortgage that offers the most liberalized prepayment privileges available.
• Look for options and features that provide the maximum in flexibility, whether renewing the loan or selling the house.
• Look for a mortgage that offers the lowest possible interest costs, with the fewest hidden charges.
• Look for a lender whose package best reflects your unique circumstances.

Knowing the rules of the mortgage game just isn't enough. Mortgage borrowers also need a strategy when shopping for a mortgage. First, carefully analyze which features of the perfect mortgage are most appealing and important. Since no lender offers everything you are looking for, draw up a "needs and wants" list. Features that you absolutely must have are "needs," while those you would like to include are "wants." List them in order of priority, creating your own personalized ranking system. The mortgage arranged should provide the greatest number of perfect mortgage features, satisfying all of your needs and as many of your wants as possible.

Then carefully and prudently shop the market looking for that mortgage, asking lenders a multitude of questions about what their packages include. Remember, there is more -much more -to a mortgage than its rate. When inquiring whether a lender offers a particular feature, borrowers will soon learn the answer usually is that some do and some don't -it depends on the individual lender.

Once you find a lender that offers the features you find most desirable, make 100% sure those features will appear right in the mortgage that you sign. Being told it's the policy of the lender to offer these options is not enough. Policy can change overnight with a directive from head office. A feature that is written into the mortgage is unalterable.

Negotiating a mortgage loan is somewhat different from buying a car or a house. There, the overall package is the sum total of the individual items included or excluded. Negotiating a mortgage means discovering which of the perfect mortgage options a particular lender provides. If a certain feature is not available as part of that lender's package, little can be done to have it included. Borrowers must continue their search until they find a lender that provides what they are looking for.

The only way to book a mortgage with the best possible terms, and then to get rid of that debt as quickly and cheaply as possible, is to carefully shop for it. Otherwise, the hidden charges and clauses could wreak financial havoc for borrowers. Prudent mortgage borrowers will shop for mortgage money as thoroughly and diligently as they shop for an asset such as a house, and book a mortgage that comes as close to the perfect mortgage as possible.

An important part of this mortgage strategy for home buyers is the "pre-approved" mortgage, where the mortgage is arranged before the house is even bought. But even pre-approved mortgages have their drawbacks. Still, purchasers should never leave the question of arranging a mortgage to the very end, considering it for the first time once an Agreement of Purchase and Sale has been signed. That is even more dangerous.

Shopping for the best mortgage does not apply only to buyers arranging a mortgage to finance a purchase. Changing lenders when a mortgage matures to take advantage of the perfect mortgage features has become easier and cheaper than ever. With an increasing number of shorter-term mortgages being arranged, there are more and more opportunities for current homeowners to switch lenders all the time. This strategy of actively seeking the most desirable mortgage features is equally important for anyone booking a mortgage for a home purchase, or whose mortgage is coming up for renewal.

There are many factors which must be weighed examined before you sign on the dotted line to take out a mortgage with a lender.

Property tax accounts
Amortization period
Term of the mortgage
Interest rate
Open or closed mortgage
Payment schedules
Prepayment privilege
Assumability
Portability
Convertibility
Pre-approved mortgage
Early renewal

Back To Top