Ok, so you have finally found that dream house you’ve always wanted. The price is right, and you’re ready to finalize the purchase. But wait! If you are not one of the fortunate few who can purchase the home with upfront cash, then you need financing, right?

Now comes the hard part, what type of mortgage would be a best fit for your particular circumstance? For the purpose of this article, let’s discuss fixed rate mortgages. Hopefully, you have already been approved for a loan by a lender. A preapproval letter from a lender should, in fact, have been in your possession before you even began house hunting.

By the way, forget about a prequalification letter from a lender. It’s meaningless. All that tells a seller’s agent is that the lender has verified that you are accepted based only on preliminary financial information, and NOT preapproved. Preapproval will only be granted if you pass a more detailed financial inspection.

Although negotiating a mortgage that best suits your financial means can be complex, there are a few basics that should be kept in mind:

• You will have lower overall monthly payments on a 30-year fixed rate mortgage then on a 15-year fixed rate mortgage.
• A 15-year mortgage will have higher monthly payments, but your home will be all yours in a much shorter time, and you will have saved many thousands of dollars interest.
• You can pay off your 30-year mortgage earlier as well by doubling up on your monthly payments, which will also save many thousands of dollars in interest.
• You should carefully scrutinize the terms of your loan to be sure that the lender did not include a “prepayment penalty “clause – prepayment penalties are illegal in Massachusetts. This clause will exact a dollars and cents penalty for an early payoff. This is something you do not want, for sure! For example, if you decide to refinance for one reason or another, the penalty clause would be in affect and cost you money you wouldn’t ordinarily have spent. There should be no penalties whatsoever for paying off a fixed rate mortgage ahead of time.

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• Mortgage Rates Remain Low for Potential Home Buyers
• Mortgage Rates Are Falling
• Rising Mortgage Payments
• Tips on Selecting a Lender