Let´s be completely honest here—taking on a mortgage is a huge deal. Not only does the bank take a lot of risk by providing you with a substantial amount of money, but you are also suddenly burdened to pay off a large sum of money. Therefore, before taking on a mortgage, it is crucial for you to ensure that you can finance the deal.

Many people often get the wrong mortgage for their needs, which often results in a massive financial loss. If you don’t want to belong to that particular category of people, it is imperative for you to brush up on your mortgage knowledge. Luckily, we are here to help you. Here are 9 things to know before you take on a mortgage.

A good credit

If you want to qualify for a mortgage, it is essential for you to have good credit. You will need to establish a good credit history to be attractive to the lenders. And, in order to have a good credit, you will need to check your credit for errors and make timely payments on your previous loans as well as monthly bills.

Lowest interest rate mortgage

You should be aware that the lowest interest rate mortgage isn’t always the best deal. Interest rate alone can´t be relied on to make the best financial decision. Very often, the mortgage rates are artificially reduced. There may be adjustable rate features or the addition of upfront discount points that may not completely agree with your financial situation.

Pay attention to the total cost

Since there are many things to consider in a mortgage, you can tend to overlook the total cost of the mortgage. Hence, it is essential for you to calculate the total cost of a mortgage and understand how much interest you´ll have to pay to the bank. Also, that doesn’t include the various fees and other closing costs they’ll tack on.

Annual percentage rate

You should be well aware that the Annual percentage rate doesn´t always tell the entire story. For instance, it doesn’t factor in how quickly a mortgage principal is paid down. In addition to that, it also bases payment adjustments on current index rates rather than forecasted future rates.

Be cautious of low payments

It is ill-advised for you to rely on payments alone to choose the best commercial real estate loan. Many a time, the monthly payments are manipulated to make the mortgage scheme more affordable. The monthly payments can also be manipulated by adding adjustable rate features or up-front closing costs.


Let’s be honest here—mortgage interests are closely tied to time. While short-term fixed-rate loans have lower interest rates, long-term fixed-rate loans have higher interest rates. There is no point in getting a 20-year fixed loan when you only intend to own a particular property for a couple of years, is there?

Long-term mortgage

If you get a long-term mortgage deal, you will end up paying higher interest charges over the life of the loan. Although short-term mortgages have higher payment, that difference actually works in your favor as it goes directly towards reducing your principal balance. Plus, short-term loans also have a lower interest rate, which should reduce the total costs over the life of the loan.

Shop around

We would strongly advise you to shop around putting pen to paper on a mortgage application. When searching, you should also ask about closing costs and other fees to understand what exactly is charged. After that, you can compare the information and finally decide on the type of mortgage that best suits your needs and requirements. Shopping around will, without a doubt, help you get the best deal on your mortgage loan.

Financing closing costs can hurt you

In some cases, lenders will dismiss the up-front costs of a mortgage and instead add those costs to the loan amount. Now, if you´re financing closing costs, you will be paying for the closing costs with the equity in your property. And, the interest charges can end up doubling or even tripling the initial costs of the closing costs over the life of the mortgage loan.

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