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Choosing a Mortgage

Posted by  on Apr 16, 2009
 
If you are interested in buying a house and do not know what to do about your mortgage, there are a few things to keep in mind before you decide what mortgage rates will be best for you. It is important to stay up to date on the housing prices and make sure that you are not being taken advantage of. You will want to receive the best prices possible and not pay too much interest, gaining money eventually from your purchase.

If you are going to purchase a house in 2007, and you make a down payment of less than twenty percent, you will have to either buy mortgage insurance or get a piggyback loan. This is a primary mortgage for eighty percent of the home's value and a second mortgage for the rest that you owe. For a long time, piggyback loans were usually a better deal because the interest on both loans was tax-deductible and mortgage insurance wasn't deductible.

For loans that originated in 2007, the mortgage insurance premiums will be deductible from federal income tax. This is an important change because it means that mortgage insurance will be cheaper in the end for several homebuyers, especially those who live in their homes for five or more years and keep the same mortgage.

In addition, when you get a mortgage, shop around. Make sure you do not just talk to the lender with a desk inside the office of your real estate agent or builder. Sure, talk to that lender just to mollify everyone, but you will not get the best possible deal if you do not shop around.

In addition, keep in mind that it is illegal for a builder to require you to use the builder's in-house lender. If the builder tries to pull this trick on you, document everything and report it to the state attorney general.

Another thing to keep in mind is that you will probably want to make an extra payment. If you make thirteen mortgage payments every year, you will pay off a 30-year, fixed-rate mortgage in less than twenty-five years. Also, remember that if it sounds too good to be true, it probably is.

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