Mortgages are loans that help a person or a business to purchase a property at an affordable price. The person or business, also known as the borrower, will apply for a mortgage from banks or other financial institutions. Once approved, the bank or other financial institution, also known as the lender, will lend the borrower an amount equivalent to the purchase price of the property. This amount will then be paid back by the borrower in the form of an amortization.
When a borrower plans to get a mortgage to purchase a property, it is very good to ask this questions before applying for one.
- Do I know my numbers?
It is very important that the borrower is aware of the numbers involved in the mortgage. This includes the charges, cost of equity, interest rates, amortizations, etc. Knowing these will allow you to manage your mortgage better and make decisions that will benefit you eventually. Because of the nature of the loan being a long term, it is necessary that you can foresee the effects of interests and other charges that may eventually affect your payments.
- Do I have a source of where to get the loan payments?
This is very critical. If you are getting into a long term mortgage, you need to assess the stability of the source of your income. If you are a part time employee who may be terminated anytime, you might have to re-think of finding a more stable source of income.
- Do I have a back up plan?
Being a long term obligation, it is very uncertain on what can happen during the coming years. Having the right plan on hand can help manage the mortgage. Having a back-up plan on unforeseen events will definitely be a good move.
Keeping these three questions in mind will help you when you are planning on getting a mortgage. It is good to assess yourself and the actions you are taking to make sure that everything runs smoothly.