Mortgage Dictionary

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Mortgage Goal

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, and objective.

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 loan.

  • 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 refinancing.


Main Objective

  • Total cost. The total mortgage cost over the projected life of this loan (10 years) should be minimized.

Mortgage Constraints

  • Upfront payment. The total upfront payment (down payment, points, settlement costs, etc.) should be no more than $10,000.

  • 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.

See also:   How to Write Mortgage Goals