Preliminary Mortgage Analysis
After you have gathered information on mortgage options, you need to do
one more thing before you begin to shop for a mortgage. You need to
conduct a preliminary analysis of the options you've identified.
Why Bother With a Preliminary Analysis?
The main reason for conducting a preliminary analysis before you
talk with prospective lenders is educational. There is no better
way of educating yourself on the current mortgage market than to
personally assess current mortgage options against your
(You have written a mortgage goal, haven't you?)
The knowledge you develop will prepare you for discussions
with lenders, loan officers, and brokers. It will help in at least
- Identify promising options. By evaluating
potential mortgage options against your mortgage goal,
you will be able to classify options into those that are
promising and those that are not. When you finally talk with
lenders, you can guide the discussion to areas that are likely
to be more fruitful (and less costly) to you.
- Reveal knowledge gaps. Inevitably, as you
conduct the preliminary analysis, you will discover that you are
missing critical information or that you have questions about
the options under consideration. Make a note to yourself to
fill in these knowledge gaps when you talk to lenders.
- Assess recommendations. When you talk with
lenders, they will all claim that their recommendations are
better than anyone else's. Having conducted a preliminary
analysis, you will have a basis for assessing the quality of
their recommendations. And, if need be, you will have the skill
to independently verify the validity of any claims that they
For these reasons, you should conduct a preliminary analysis
before you talk with prospective lenders.
How to Conduct a Preliminary Analysis
If you have read the previous lessons in this tutorial, you already
have the foundation needed to conduct a preliminary analysis. This
section describes how everything fits together.
- Purpose. The purpose of the preliminary analysis
is to identify the mortgage options that satisfy your mortgage
goal, at the lowest possible cost.
- Mortgage goal. The first step is to write out a
Review goal writing.
- Mortgage info. The second step is to collect
information on mortgage options that potentially satisfy the
- Mortgage evaluation. And finally, estimate the
total mortgage cost for each option. Among the options that
satisfy the mortgage goal, note the low-cost options. Think of
these as viable alternatives, and temporarily reject the rest.
Review how to find total
Congratulations! You are now (finally) ready to talk with lenders and
buy a mortgage.