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Guidelines for making a mortgage decision for purchasing property in CITY
  
     
Planned period of your stay in the new property:  
     
 
For example, if you intend to live in the house for 7 years or less, you may want to consider an intermediate adjustable with a rate that is fixed for a 5 or 7 year period. Why give the higher rate of a 30 year fixed when you don't have need of such long term financing. Also if your time horizon of ownership is 7 years or less, it is advisable to opt for minimal closing costs because your opportunity to recoup the price of high closing costs is dramatically reduced.
 
     
List your current financial priorities (i.e. cash flow, rapid repayment of the home loan)?  
     
 
For example, if cash flow is a top priority, an adjustable with varied payment options may be your best bet. Some adjustable products agree borrowers to choose from 3-4 payment options each month (i.e. interest only, allowing for negative amortization, 30 year fixed rate fully amortized or 15 year fixed rate fully amortized). This allows a borrower to prefer a different payment option every month based upon his or her monthly cash flow.

For others, the purpose may be rapid repayment in which case a 15 year home loan may be considered or possibly an adjustable rate with a lower rate of interest supplemented by extra principal payments to retire the mortgage debt early. With an adjustable vs. a fixed rate, your principal reduction payments will manage to pay you a progressively lower required monthly home loan payment as the mortgage is recast and interest is calculated and your payment is based on the existing home loan balance vs. the original balance. With a fixed rate home loan your required payment will remain constant over the life of the home loan, regardless of any principal reduction payments you may make.

 
     
List whether you anticipate any major changes to your financial situation in the next few years.  
     
 
For example, do you anticipate receiving funds (stock options, inheritance, sale of an asset) in the next few months or years that would sanction you to pay down your home loan balance? If so you may choose a home loan with an interest rate that is guaranteed for a shorter term (i.e. an ARM with a rate fixed for 1-5 existence) reflecting the time frame from which you expect to receive the funds. After this time you could refinance, using these funds to pay down the balance on your existing home loan or if you currently had an adjustable that is scheduled to recast, you may just pay the balance down and enjoy a lower monthly payment without refinancing.
 
     
Check recent credit history:  
     
 
If you have outstanding credit, you may have question about home loan products that are discounted for individuals with high credit ratings. In addition to credit, some lenders will also offer further discounts to borrowers who have high equity in their property, usually considered to be 30-35%+.

For those having credit blemishes, it is best to discuss your history openly and honestly with your home loan consultant and to analysis your current credit report together. The market for less than perfect credit applicants (referred to as sub prime) has grown considerably over the last few years offering competitive interest rates and a greater variety of product options. For those planning to improve their credit ratings, it is greatest to take shorter term financing of 2 to 3 years, after which one can refinance into "A paper" (the best) financing.

 
     
Check your documentation:  
     
 
If you will not be able to adequately document your income, you may opt for a quick qualifier, easy qualifier or no income verification home loan. These products usually offer a trade off though, the less documentation you are able to provide the higher the interest rate will be. Some of these programs also require a higher amount of equity in the property. There are also programs that do not require authentication of either income or assets (referred to as NINA mortgages). Each of these mortgages could have higher interest rates and equity requirements associated with them.
  
     
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