How to Evaluate Mortgage Options: Case Studies

Most home buyers purchase their mortgage without fully understanding its cost, or the cost of other available options. It doesn't have to be this way.

Case Studies

The case studies show, step-by-step, how to evaluate mortgage options objectively. Each case study presents the solution to a single mortgage problem. As a group, the case studies address nine common mortgage questions.

• What will be the monthly payment for my mortgage?
• Which mortgage will cost least, over the period that I own my home?
• How can I compare two mortgages objectively?
  
  
• Should I pay discount points on my mortgage?
• Should I lock in my interest rate, or should I let it float?
• What down payment will be right for me?
  
  
• Should I accept a prepayment penalty in my mortgage contract?
• Should I make mortgage prepayments?
• Should I refinance?

With a good mortgage calculator, you can quickly and easily answer each of these questions. And you can save a lot of money in the process.

A Final Thought

When they choose a mortgage, many home buyers rely on "gut feeling" or they blindly follow the recommendation of their loan officer. That can be a costly mistake. You should compare options, based on how much they will cost over the period that you own your home.

The case studies show how to compare the true cost of different mortgage options, so you can choose the mortgage that is right for you. The best course is to consider many different options, evaluate each using the mortgage calculator, and choose the one that best meets your personal and financial goals.

At a minimum, you should know the likely total cost of a mortgage before you actually buy it.