Shopping for a mortgage requires that you be well-informed about
the market forces that influence mortgage prices and the real estate
industry. To this end, researching the finances behind mortgage
borrowing is important to help you make the best decision that suits
your needs. In addition to understanding mortgages, research how the
mortgage process works so that you can anticipate every step and can
collect all the documentation you need in advance of the final closing.
You should also be well-acquainted with your own financial situation,
including credit reports from the major credit reporting agencies,
TransUnion, Experian and Equifax.
The interest you pay on your mortgage is an important factor to
consider the long-term cost of your loan. Interest rates vary depending
on the type of mortgage you have and economic factors. For example, if
you have a fixed-rate mortgage, only an established rate is applied to
your loan for the entire time you pay on the loan. In addition, interest
rates are in continuous adjustment by consumers, the markets and the
Federal Reserve. Securing a good interest rate often depends on the
right economic timing.
Mortgage loans come in different lengths of time called maturity.
For example, 30-year mortgages are common among most home buyers, though
20- and 15-year mortgages also exist through some lenders. Note that
the maturity works in concert with the interest rate to determine the
real cost of paying your mortgage loan for the whole maturity period.
Paying off a 30-year mortgage early provides considerable savings in
interest payments in the long term.
The financial responsibilities of homeownership include paying the
mortgage, insurance, maintenance, taxes and utilities. Affordability is a
key issue that you should not overlook, since your mortgage payment
alone is not an accurate reflection on how much you will actually spend
once you have your home. Form a budget of monthly expenses and income to
measure how much house you can actually afford. This helps prevent
overextending your financial capacity and reduces the risk of losing
your home if your income changes.
Like many financial transactions, entering into a mortgage contract
incurs costs. Generally, these costs are in the form of closing costs,
real estate brokerage fees, a loan-origination fee, and points that you
may have to pay in addition to interest. Federal agencies such as the
Federal Reserve recommend that you shop around and compare mortgage
offers to help minimize the costs of obtaining a mortgage and avoid an
overly expensive long-term commitment.
source : http://homeguides.sfgate.com/need-shopping-mortgage-2169.html