Dennis Norman
By: Dennis Norman
Buying a home should be a dream come true not a nightmare of worry and stress. A new Federal Reserve Board publication, “5 Tips for Shopping for a Mortgage,” will help consumers avoid potential pitfalls and make well-informed decisions when choosing a home loan.
Financing the purchase of a home is one of the most complex financial decisions that consumers make. The Federal Reserve’s latest “5 tips” guide is designed to help home buyers find the mortgage that is best for them. The complete guide is available here however a summary of the tips are below:
- Know what you can afford.
- Review your monthly income and spending to estimate what you can afford to pay for a home, including the mortgage, property taxes, insurance, and monthly maintenance and utilities.
- Shop around-compare loans from lenders and brokers.
- Shopping takes time and energy, but not shopping around can cost you thousands of dollars. You can get a mortgage loan from mortgage lenders or mortgage brokers.
- Understand loan prices and fees.
- Many consumers accept the first loan offered and don’t realize that they may be able to get a better loan.
- Know the risks and benefits of loan options.
- Mortgages have many features — some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pad down the principal (the loan amount).
- Get advice from trusted sources
- A mortgage loan is one of the most complex, most expensive financial commitments you will ever assume–it’s okay to ask for help. Talk with a trusted housing counselor or a real estate attorney that you hire to review your documents before you sign them.
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