Now that you’ve decided to buy a home in New York City, it’s time to consider how you’ll pay for it. Mortgages can be complicated, and selecting the wrong one could seriously jeopardize your future. Here are a few pointers for choosing your mortgage wisely.
GET TO KNOW THE PLAYERS
Talk to a friend or relative who’s local in the Manhattan area and has recently gotten a mortgage– ask if they would recommend their lender and why. Then, reach out to your real estate agent or someone else who deals with mortgage lenders regularly (a financial adviser, attorney, etc.) for help with creating a list of lenders. Search the web and research these recommended lenders extensively, being sure to push past the advertising and investigate fees, lock-in periods, and qualification requirements.
When it came to mortgages, the emphasis used to be on paying them off as soon as possible. Today, the average debt accumulated per person due to credit cards, student loans, etc. indicates that you’re better off opting for the 30-year mortgage instead of the 15-year. This way, you have a lower monthly payment, with the option of paying an additional principal when money is good.
TAKE THE EXTRA POINT
When selecting a mortgage, you usually have the option of paying additional points (a portion of the interest that you pay at closing) in exchange for a lower interest rate. If you plan to stay in your new Manhattan home for a long time—and given the current real estate market, you should—taking the points will save you money and ease the burden you’ll bear down the road, when you’re investing in a family.
DRAFT A PRO
If researching mortgage lenders sounds overwhelming, you might consider hiring a mortgage broker to do it for you. A mortgage broker is an independent contractor who pairs you with lenders by scouring available loans to find the one that best fits your needs. As with your realtor, be sure to research your mortgage broker upfront and get everything in writing.
Not sure which steps to take next? Read our advice on how to minimize financing stress and let us know where you stand in the process of choosing a mortgage for your new Manhattan home so we can help you move forward!