10 Questions to Ask Before Closing Your First Home Mortgage

iStock-520711938 Being prepared is more than a motto for the Boy Scouts. It's a great idea when it comes to buying a house. A first home mortgage can especially tax your preparation skills. In fact, some home buyers make mistakes during the mortgage process. Here are 10 questions to ask before closing your first home mortgage:

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What will my monthly payment be? Prepare yourself for the monthly payment, especially if you're already paying rent. Make sure you can afford the monthly bill.
When will my payments be due? Find out the due date for your mortgage payment, and whether there is a grace period. It's a good idea to mark this on the calendar to make sure it gets paid each month.
Will my payment change? The only reason your payment should change is if your insurance or taxes change, unless you're getting an adjustable-rate mortgage. Make sure you know the answer to this before closing.
Will the seller pay some of the fees? Some of the cash-to-close fees and closing costs can be paid for by the seller of home, depending on the deal. Ask your mortgage consultant about what can be paid, and what's usually paid for by the seller.
Is there a pre-payment penalty on this mortgage loan? Make sure the mortgage loan you're entering into will not cost you extra if you hope to pay it off before the end date, even if you don't think you'll be able to do so.
Is the neighborhood right for my family? Check out the neighborhood beforehand, maybe talking to a few neighbors. They can tell you about any general problems with the neighborhood and any specific problems with home owners. Also, if there are empty spaces on the block, find out what the zoning is for those spaces. If they are zoned for residential, no problem! However, if they are zoned for commercial uses, you may end up living close to a fast food place and all the traffic that comes with such restaurants.
Is all of the paperwork signed? When getting a mortgage loan, you'll sign your name about a thousand times. Well, maybe not that many, but you get the idea. Follow through on all of your efforts by asking about what you've signed and why.
Do I have enough money for the escrow? This will fund your homeowners insurance and property taxes each year. Make sure you're bringing enough to the closing table to set up a successful year.
What is the appraised value of the home? Keeping this figure in the back of your mind can help when it comes time to consider selling the home. Although the figure will change through the years, it's something to keep in mind.
Am I required to carry private mortgage insurance (PMI)? Find out whether you need to carry PMI, how much it will cost and when you may have it removed. PMI protects the lender in case of default. In general, it can be waived when you owe less than 80% of the mortgage.

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Tips for Paying Off Your Mortgage Faster

There are several ways to pay off your mortgage faster and save on interest payments. Even better, not all methods require spending a lot of extra money! Take a look at the list below: Make extra principal payments. You can pay extra money toward your mortgage balance each month or make a larger, lump sum payment on your principal each year. This reduces the amount due on the mortgage as well as reducing the amount of interest that will accrue. Extra money can also be added to the principal payment from bonuses, gifts, savings and extra earnings. Just remember to make a note on the check for the money to go towards the principal! Make one extra mortgage payment per year. One of the easiest ways to make an extra payment each year is to pay half your mortgage payment every other week instead of paying the full amount once a month, otherwise known as “bi-weekly payments.” With these payments, an extra payment is made so that the total number of payments that one makes adds up to 13 payments in a year rather than the 12 that would have been made with monthly payments. This adds up to significant interest savings over the duration of a mortgage. You also want to make sure that if your lender accepts this kind of payment they will not charge you a prepayment penalty. Also verify that the bi-weekly payments are being applied to the principal amount and not the interest. Otherwise, you won't notice the savings. Reduce your balance with a lump-sum payment. Have you inherited money, earned a bonus or commission, or sold a large item? You could apply that amount to your mortgage’s principal balance. Another option is any time you have a month where you have that third paycheck, apply that to the principal on your mortgage. This will happen twice a year, adding an extra principal payment to your mortgage loan. While paying down a large debt is nice, it's not a requirement. Consider making sure you have enough to work toward other financial goals, such as an emergency fund, before paying more on your mortgage. However, there are many options you can explore that best fit your budget. You can learn more about buying your first home with our Get Mortgage Ready Guide below.