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Good mortgage goals help mortgage shoppers focus on
factors that are important to their personal and financial
objectives. They define criteria that can be used to compare different
mortgage options. To be useful, a mortgage goal must be concise, clear,
A mortgage goal is made up of two parts: the main objective and an associated
set of constraints:
Main objective. The main objective describes the
outcome that we are trying to achieve. For example, a common objective
is to minimize total mortgage cost over the projected life of the
Mortgage constraints. The mortgage constraints are
personal and financial factors that restrict your choice of
mortgage. They include such things as the maximum upfront
cost that you can afford, the maximum monthly payment that you
can tolerate, the importance of interest rate stability, etc.
Here is an example of a well-written mortgage goal, written by a home
buyer who expects to keep his home for 10 years before moving or
SAMPLE MORTGAGE GOAL
Total cost. The total mortgage cost over the
projected life of this loan (10 years) should be minimized.
Upfront payment. The total upfront payment (down
payment, points, settlement costs, etc.) should be no more than
Monthly mortgage. Over the projected life of this
loan (10 years), the monthly mortgage payment
(principal plus interest) should be no more than $1,500.
Rate stability. Over the projected life of this
loan (10 years), the interest rate in any single year
should be no more than 10%.
Typically, as in the example above, a mortgage goal includes a number of
constraints. Together, these constraints limit the options that
can be considered to a manageable few. The mortgage option that
satisfies the constraints and performs best (i.e., has the lowest
total cost) is chosen; mortgage options that fall short are rejected.