6 Critical Things You Must Know Before Getting a Mortgage
Avoid Costly Mistakes and Secure the Best Deal
In recent years, mortgage regulations have evolved significantly, giving homebuyers more options than ever. But with these changes come new challenges—and opportunities. Small adjustments in how you approach your mortgage can end up saving (or costing) you thousands of dollars and years of payments.
Whether you're purchasing your first home or moving to your next, it's essential to educate yourself about the mortgage process. Research shows that many buyers make the same six costly mistakes when mortgage shopping. If you avoid these pitfalls and approach your mortgage with the right strategy, you can save substantially in both time and money.
1. Get Preapproved Before You Start House Hunting
Getting preapproved is a simple yet crucial step that gives you confidence and leverage when shopping for a home. Most lenders offer a written preapproval at no cost and with no obligation, and it can often be completed over the phone. Unlike a verbal pre-qualification, a written preapproval involves a completed credit application and confirms that you're guaranteed a mortgage up to a certain amount—effectively putting you in a much stronger position when making an offer.
2. Know Your Comfortable Monthly Payment—Not Just What You Qualify For
While lenders can tell you how much you can borrow, only you can determine what you’re truly comfortable paying each month. Be honest with yourself about your lifestyle and future expenses. Working together with your lender, you can find a balance between your approved mortgage amount and your personal comfort zone—helping you focus only on homes within your realistic budget.
3. Align Your Mortgage With Your Long-Term Plans
Before choosing a mortgage, consider your future.
- How long do you plan to stay in this home?
- Are interest rates likely to rise or fall?
- Will your income change significantly in the near future?
The answers to these questions will help you select the right mortgage type and terms. Fixed or variable rate? Open or closed? The better you match your mortgage to your expected situation, the more control you'll have over your financial future.
4. Understand Prepayment Privileges and Payment Frequency Options
These features can save you thousands and cut years off your mortgage:
- Prepayment privileges allow you to make extra payments toward your principal each year—without penalty.
- Payment frequency options like weekly or biweekly payments help reduce interest by making more frequent contributions.
Not all mortgages offer these advantages, so make sure you ask about them before signing. A mortgage with flexible repayment options can give you the freedom to pay off your home sooner and save big on interest.
5. Check if the Mortgage is Portable and/or Assumable
- A portable mortgage allows you to transfer your mortgage to a new home if you move, helping you avoid early discharge penalties and requalification.
- An assumable mortgage lets the buyer of your home take over your existing mortgage. This can make your home more attractive to potential buyers and may help you close a sale faster.
Both features provide flexibility and can save you—and your future buyer—money and time.
6. Work With a Mortgage Specialist
Mortgage professionals focus solely on helping buyers find the best mortgage solutions. They understand the market, have access to multiple lenders, and can often secure better terms and rates than you might find on your own. Best of all, their services are typically offered at no cost or obligation. A mortgage expert can simplify the process, avoid costly mistakes, and get your financing approved quickly to prevent delays.
In Summary:
Before committing to any mortgage, take the time to understand these six key factors. A well-structured mortgage tailored to your goals and financial comfort can save you thousands and reduce your repayment period by years.