Acquiring a mortgage to buy a new home can be fraught with danger, but following a few simple tips can avoid many of the problems faced by new homeowners. Provided below are ten important points to remember when getting a mortgage, the value of which must always be assessed beforehand using a mortgage cost calculator.

1. Check Credit Report

Finances may have been squeaky clean for some time, but defaults and bankruptcy notices can linger on credit reports for a number of years. It is essential that any person considering a mortgage check his credit report as a matter of priority – old account information and erroneous notices could be weighing down an individual`s credit rating, making it harder to acquire a good mortgage deal.

2. Compare But Do Not Commit

Searching the internet for the best rates on mortgages is generally a wise move; after all, some of the lowest rates are available online. Before committing to a mortgage, it is prudent for prospective buyers to compare rates, fees and terms with other lenders. The process may seem time-consuming initially, but it almost always pays off in the long run.

3. Treat Internet-Only Lenders with Caution

The internet is a superb medium through which people can buy weekly groceries, order electronic goods and read about alien abductions, but it is not necessarily the best place to acquire a mortgage. Considering that a mortgage is likely to be the biggest single investment of a lifetime, it ought to be managed by a reputable, hands-on firm – one that is able to accept telephone calls and arrange meetings in person.

4. Is the Lowest Rate the Best Option?

The rate is obviously one of the most important aspects of a mortgage, but it is certainly not the only one. Acquiring a mortgage with excellent terms is every bit as important as acquiring a mortgage at the most competitive rate, while lenders must be trustworthy, professional and capable of imparting knowledge and advice to the buyer.

5. Avoid Interest Only Mortgages

Buyers who plan to settle down for a number of years ought to avoid interest-only mortgages like the plague. Offering only marginally lower monthly repayments, interest-only mortgages pay nothing toward the ownership of a property, making them useful for short-term buyers but generally useless for everyone else.

6. Avoid Minimum Payment Mortgages

Some lenders supply minimum payment mortgages to certain types of customer. Unable to cover the standard rate with interest, minimum payment mortgages are almost always bad news because they quickly lead buyers toward negative equity (where the value of a home is less than the debt owed.)

7. Avoid Variable Interest Mortgages

As the world plunges toward another economic disaster, it is worth considering whether a fixed or variable rate mortgage is the better option. Under normal circumstances, a variable rate mortgage affords buyers the opportunity to save money on interest repayments – but it can also prove more costly. When times are as unpredictable as they are tough, a fixed rate loan is usually the best option.

8. What Constitutes an Acceptable Fee?

As with the vast majority of financial transactions, mortgages are subject to fees. Knowing what constitutes an acceptable fee requires an understanding of the market, as described above. Unfortunately, as noted below, fees and charges come in various guises.

9. Explore the Terms of a Mortgage

Before signing on the dotted line, it is prudent for mortgage applicants to read the terms and conditions of their loan agreement very carefully. Late payment charges and early settlement fees are common provisions of such agreements.

10. Use a Mortgage Calculator!

Finally, no prospective buyer should ever apply for a mortgage unless all associated costs have been properly calculated. Failing to use a mortgage calculator is the first step toward foreclosure.

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