Getting a Mortgage

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Congratulations!

You've found the perfect home and your offer's been accepted. Now it's time to get your 1st mortgage.

If you are working with a real estate agent or mortgage broker he/she should be able to provide you with a list of mortgage lenders. If you are purchasing the home yourself, ask colleagues, family or friends for referrals. You can also check with banks, savings and loans or get mortgage rate quotes off the internet.

Make sure your financial records are in order. Your mortgage broker will need to verify employment income, credit card debt, car payments, bank balances, and investment income. The mortgage broker will also need to have the residential property appraised to determine its fair market value.

If you have a financial planner contact him or her to discuss what you can realistically afford for a down payment and mortgage loan. Remember, your mortgage payment includes homeowners insurance, taxes and assessments if you're purchasing a town house or condominium.

As a general rule, home mortgage payments should not exceed 25 to 28% of the homeowner's monthly income. A mortgage calculator can help you figure out your costs.

Types of mortgages -

Fixed rate - 15 or 30 year

A fixed rate mortgage locks in a specified interest rate for the life of the loan.

With a 30 year fixed rate mortgage loan, the monthly payments will be lower but the total amount of interest paid will be higher. With a 15 year fixed rate mortgage loan, the monthly payments will be higher but the total amount of interest paid will be lower.

15 year fixed rate loans are advantageous if you have a large down payment or want to have the loan paid off before children start college or you begin retirement.

Adjustable rate mortgage (ARM's)

ARM's offer lower initial interest rates (1-3%).

The interest rate on an adjustable rate mortgage adjusts periodically though-out the life of the loan. Before purchasing an ARM determine how often the interest rate will adjust and what the maximum caps will be.

Do not purchase an adjustable rate mortgage that does not have a maximum lifetime cap.

ARM's can be advantageous if you anticipate your income increasing, expect to live in the property for a short period of time or need a lower interest rate to qualify.

Balloon mortgages

Balloon mortgages are usually offered as 3, 5 or 7 year fixed rate mortgages loans. The principal balance is due at the end of the loan period. Many mortgage brokers will refinance the principal balance at the end of the loan period. The risk with balloon mortgages is - if interest rates have gone up - it can result in significantly higher mortgage payments.

Balloon mortgages are advantageous when purchasing a property that is appreciating or if you anticipate living there for a short period of time.

Closing costs

Appraisal fee

Title search

Title insurance

Survey

Deed recording fees

Credit report

Tax adjustments

Jewish Wedding Planner, 2007