Education is key when considering home ownership

(ARA) - Buying a home is one of the biggest decisions and commitments one will ever make, yet many people are not nearly as familiar with the ins and outs of the mortgage process as they are with their favorite TV show or sports team. Taking time to educate yourself will go a long way in easing the stress of buying a home and preparing you for the responsibilities of home ownership.

"Low rates, combined with stabilizing home prices, are creating buying opportunities for those who qualify," says Michael Copley, retail lending senior vice president of TD Bank. "But before you buy, do as much research as possible - research lenders, know the products and make sure you understand the costs associated with home ownership."

Your lender may be your most valuable partner in the home purchasing process. When searching for a lender, find one you're comfortable with and who's looking out for you. Your lender should be able to educate you, explain things well and provide accurate, quick answers to your questions so that you can make smart borrowing decisions. Some institutions, like TD Bank, even offer educational seminars to prepare you for home ownership. Also, consider a lender who is able to make lending decisions locally. It will help you develop a stronger relationship with your lender and ensure you're not just another number.

Today, many banks sell their mortgages on the secondary market to improve the bank's overall liquidity. A lender that does not sell its mortgages can offer certain advantages.

"Working with a lending institution that doesn't sell its mortgages provides a pricing advantage. Additionally, there is an opportunity to modify the interest rate, instead of having to refinance, which ultimately saves you time and money," explains Copley.

TD Bank, for instance, holds and services all its conforming and jumbo loans. As a portfolio lender, it is able to provide more competitive pricing and won't charge add-on fees, such as those for a second home or an investment property.

In addition to researching lenders, it's important to understand the various products and programs in the market. When choosing a mortgage, you need to know how it works and how it will impact your financial situation.

"Do your own research to educate yourself on the differences between fixed- and variable-rate products," advises Copley. "Then, talk with your lender about the impacts these products could have on your financial situation; doing so will build more trust between you and your lender as well as confidence in your own ability to understand the product and repay the loan in a timely manner."

You should also familiarize yourself with the various government stimulus programs, such as the $8,000 first-time homebuyer tax credit or the $6,500 repeat/move-up homebuyer tax credit, both of which expire on April 30. If you qualify, a Federal Housing Administration (FHA) loan can also help you save money as the FHA will insure your loan, enabling your lender to offer you a better rate.

Finally, keep an eye out for special programs and unique opportunities. TD Bank, for example, is looking to pay off someone's mortgage up to $250,000. All existing mortgage customers, as well as those who apply for a mortgage through April 30, will be entered to win the mortgage payoff. The bank is even giving away six weekly prizes of $2,500 to help with your monthly mortgage payments.

And, finally, when applying for a mortgage, don't underestimate the other costs of home ownership. In addition to the mortgage process, there are taxes, homeowners insurance, closings costs - which include home inspection and appraisal and attorney fees - and your down payment. There are also costs associated with home ownership that you may not have had when renting, such as paying for your own repairs on the home and certain utilities that may have previously been included in your rent. The mortgage-qualifying process factors these expenses in, but you can't rely on your lender for determining your expenses. Create a budget of your expenses so you can truly understand what you can afford and what your financial situation will be when owning a home.

Courtesy of ARAcontent