You have looked at dozens of homes, have crafted a foolproof wish list and now, it is finally time to sign off on your mortgage. However, before you get too excited and go signing anything, you need to read it over closely. In addition to that, there are some questions that you should ask yourself before officially signing the mortgage and putting yourself hundreds of thousands of dollars in debt.
These questions will ensure you are truly getting the mortgage you want, and to ensure you understand the terms included in the arrangement. This blog post will look at a few of these questions that you need to consider before making anything official.
What is My Payment Schedule?
Of course, one of the most important things when signing a mortgage is to know your payment schedule. You need to know when it starts, when it ends. In addition to knowing your payment and amortization schedule, you will also want to know how much you are paying.
You will likely be making this payment on a predetermined schedule for decades, so you should know exactly what you are paying. How much or each payment is going to interest and how much is actually going to the principal? These are very important things to know.
What Happens If I Break or Pay Off My Mortgage Early?
While some people just leave their mortgage alone and pay the correct amount for the correct time, that isn’t always the case. There are those who will want to pay off the mortgage early to save on interest, or those who might want to break it off early in search of a lower rate.
However, this isn’t always allowed. If your mortgage doesn’t allow for either of these, there could be big penalties in store for you. Instead, be sure to talk to your agent or read the agreement in full so you know what you are allowed to do, and what will result in your having to pay a penalty of some kind.
What Will Happen at the End of the Term?
Some people often confuse the “term” with the amortization period, but they are two different things. An amortization period is the total time it takes you to pay off your entire mortgage, and the term is the specified amount of time that you are tied to a certain lender, or interest rate.
As a result, when your mortgage term ends, you are free to go search for another lender or try and find a better rate. Of course, you can continue with your current lender, but it makes sense to look around as you might be able to find a better deal. These mortgage terms can be anywhere from 6 months to 10 years, with 5 being among the most popular terms selected.
Did I Choose The Right Kind of Mortgage?
It is also smart to make sure that you have selected the right mortgage for your wants and needs. While you might just think a mortgage is a mortgage, that isn’t the case. There are many different kinds, each with their own intricacies and nuances.
For example, you have fixed vs. variable interest rate loans, conventional vs. government-insured loans, conforming loans vs. jumbo loans and more. The type of loan you select will depend on the needs and preferences of yourself and your family.
In conclusion, asking yourself these questions before officially signing on the mortgage is a good way to reassure yourself that you are making the right call.