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Mortgages are getting increasingly complicated but we've got strategies;
get the best mortgage to fit your individual needs.

Mortgage Types
There are a plethora of loan types out there, but before you start considering 100% financing versus first-time buyer programs versus interest-only loans, there are a couple of other more basic mortgage types that you might want to consider.

Seller Financing:
There are many reasons why a seller might want to finance the loan themselves, and there are many reasons why you might want to go down this path, including poor credit, the need to negotiate a better interest rate or the desire to avoid mortgage insurance. The bottom line is that if the seller is willing to do this, such a deal will normally only be for a few years, after which time you’ll need to get a regular loan.

Assuming an Existing Mortgage:
Rather than getting a new mortgage, you can sometimes take over the existing mortgage on the house. Some people like this option because it can avoid some of the typical administrative fees charged by mortgage brokers, and it can have a lower interest rate than the real estate market will currently offer. The only problem is that the existing mortgage needs to be transferable, and you will need to somehow cover the difference between the original value of the home, and the current value.

Playing with the Details
There are two main ways to alter the details of your mortgage:

Negotiate:
Sounds obvious, but most people tend to think that published interest rates are final. However, as long as you are willing to negotiate, and your credit history is in pretty good shape, then you should be able to get some slightly better terms; a reduction of around a quarter percent of the published interest rate should be doable.

Adjusting the Points and Mortgage Length:
There are two big factors that will affect your mortgage payments: (1) the interest rate and (2) the length of the loan. It is important to understand what is right for your current situation by using different loan calculators to see what would happen if you paid points in order to lower your interest rate, or had a 15-year rather than a 30-year loan. A good source of free mortgage calculators is the Yahoo Finance Center, which can be found at: http://loan.yahoo.com/m/mortcalc.html.

Closing the Deal
Another thing to consider is a seller concession. This is essentially where you add up to 6% of the agreed-upon house price, which the seller then gives back to you. This money is then used to cover your closing costs. Again, such an option is very dependent on your situation. It does mean having to have a higher mortgage payment, and the house has to appraise for the 6% higher value. However, if the money you would have used for closing costs can be put into savings that yield a decent return, then after the mortgage period is up, you’ll most likely be ahead!

During the Mortgage Period
The way a typical 30-year mortgage works is that in the first half of the mortgage, the vast majority of the mortgage is interest. It may take over 20 years before you own as much of your house as the bank does! One way to speed up the percentage of the house that you actually own is to pay down the principal. Consider it an investment, but rather than investing in stocks, for example, you are investing in your house.

Keep these basic strategies in mind, and you are much more likely to get a mortgage that fits your unique situation, rather than something you are unhappy with.


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