1) What penalties could I face?

Be sure to inquire as to what will happen if you pay off your mortgage early, refinance it, or sell your house. You may be facing a three-month interest penalty or an interest-rate differential, which is the difference between the interest charged at the time you signed your mortgage and the interest available at the time of refinancing. These penalties could cost you thousands of dollars.

2) What are prepayment privileges?

The rate at which you pay down your mortgage has a huge effect on the interest you pay over time. Find out how much you can pay off your mortgage without incurring penalty fees.

3) Is my mortgage portable?

People sometimes sell their house before their mortgage is paid off, and buy another house. Find out whether your mortgage is portable, meaning you can take it with you to your new house at the same interest rate. Or, if you are selling your house, can the new owners assume your mortgage, meaning they take over your mortgage at the same interest rate? This can be a good feature in selling your home.

4) What’s my risk tolerance?

Establish the pros and cons of fixed vs. variable interest rates – to find out more click HERE. You must ask yourself if you can handle rising rates, which will increase monthly payment or your amortization, depending on the type of mortgage. You should also find out what happens if you decide on a variable-rate mortgage and later decide to lock it in at a fixed rate.

5) Can I accelerate my payment frequency?

Find out if you can pay weekly or bimonthly. This simple step can knock years off your amortization and thousands of dollars off interest costs.