Tips for Negotiating Your First Mortgage

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Obtaining your first mortgage is certainly a proud achievement. Home ownership can bring about an increase in your quality of life and is generally seen as a positive step for both individuals and families alike. But as thrilling as this period may be, negotiating the terms of your first mortgage can be a stressful task.

First-time buyers often make the mistake of putting off their research until the very last minute. They also fail to take advantage of professional advice and end up signing on to an agreement that is not suitable to their needs. A mortgage is the single biggest loan you will ever take on. Never take this type of commitment lightly as it can have a huge financial impact on other areas of your life.

Below are some tips for negotiating your first mortgage to ensure that you're protecting yourself and your residential investment.

Do your homework

There are basic terms in the mortgage industry that all homeowners should be aware of. Read up on the definitions for things like "fixed rates" and "variable rates" and compare them side-by-side. Learn why one might be better for you than the other and be prepared to talk about these options with your lender. You will also have to choose between a "closed" and "open" mortgage, so stay on top of what these terms mean and how they apply to your situation. The more knowledgeable you appear, the better negotiating you will do as you sit across from your lender.

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Customize your mortgage as much as you can

A loan that looks good to your next-door neighbour may not be the best option for you. Try to customize your mortgage terms as much as possible so that the rules work in your favour. For example, a loan with a cheap interest rate may look attractive on the surface. But these types of mortgages often come with extravagant penalty fees if you ever wish to cancel. Unexpected life events do occur that could force you to break your mortgage before its renewal date. Avoid getting locked into terms that require hefty fines because the banks will make it very difficult for you to break out of your mortgage early.

Enlist the help of a financial planner

A professional financial expert has access to various lenders outside of the banking realm. Although it may seem easy to go straight to the bank where you do your daily banking, it's not a bad idea to see what other institutions are offering..

You have more power than you know
Approaching big banks can be intimidating, even for the experienced homeowner who is familiar with the mortgage industry. But today's shaky economy and competitive housing market means lenders are actually the ones competing for your business. Not the other way around. Remain confident and know that any financial institution would be lucky to have a responsible individual like you as their client!

Financial experts or mortgage brokers can shop around for you, based on your current financial situation. Remain honest with him/her about your current debt load and what you can and cannot afford.

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Article Source: http://EzineArticles.com/expert/Edward_Carolin/1752321

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