With the announcement last week by the Bank of Butterfield of a new mortgage product (95 percent financing), home buyers now have a larger range of choices. Shopping for and owing a home is a great emotional experience and for most of us, the biggest purchase you will ever make! If it is true that a man 's (woman's) home is his/her castle, then that is reflected here. Bermudians and other residents lavish love on their homes, and why not? Where else can you see a full moon rising over the Atlantic such as last night before the storm? Or a 180 degree complete rainbow, ending naturally at your door step? The same care and attention when purchasing that home should be used to research your mortgage. And unlike many other countries, here you have a voice and a name; you are not a number dealing with an anonymous person. You will receive personal attention from all of Bermuda's mortgage companies while your particular set of financial circumstances are carefully considered. Free market competition is a wonderful thing. It gives you greater access to more information, and a greater comfort factor when making your final decision. The consumer, in this way, does also drive the market by choosing the best product or service for them, at that time.

A bit of history. Having lived in the United States, we were used to seeing 10 to 15 (and now hundreds off the Internet) mortgage companies competing for your dollar. Innovative and very aggressive home selling and mortgage marketing techniques are commonplace: no money down; little money down; seller pays the down payment; no points at closing; seller pays all closing costs; all buyers pre-qualified (how much can you really afford) before any real estate agent/firm showed them property. Even private owners used a house lottery sales technique in order to finally sell an old white elephant property. Say everyone interested bought a $500 dollar ticket, Hey, it worked most of the time; although several large flops (the money disappeared) ended up in a State Attorney General's Consumer Affairs Protection Bureau.

Why? Because mortgages (under certain dollar limits) are bundled and sold as an investment product almost immediately, right into what is known as the secondary mortgage market in the securities market arena. The original mortgage company gets its piece of the pie immediately; you may never see them again, if you ever even met with them in the first place! Your loan ends up being serviced by some remote phone or computer voice in East Oshkosh, North Dakota. Try working out a payment problem with them! In civilised countries, including Bermuda, much consumer protection exists, in the form of laws and disclosures. The Truth In Lending Act is in place here whereby lending institutions do disclose all facts relevant to the real cost of borrowing by you, John and Marsha Public. This is an important point because with more mortgage choices, you need to understand and work out all of the costs, costs that affect you presently, and costs that go into the future! Currently, the local mortgage providers are Bermuda Home, the Bermuda Housing Corporation (which works with individual clients and lending institutions), Bank of NT Butterfield, Bermuda Savings and Loan, and Gibbons Co. There are also many private mortgages, and some from insurance companies drawn every year. You should apply the same careful analysis to them. Families have had irreconcilable differences over poorly negotiated (and documented) loans between family members.

Here are some suggested questions to ask when interviewing a mortage company: What are your mortgage interest rates? Am I paying off principal and interest each month? Do you have fixed rate mortgages (rate does not change) for the term of the mortgage and variable (floating interest) rate? If you offer a fixed rate, how long is it for? And do I have to pay another fee to renegotiate the loan? Please explain variable rate to me. I understand that the variable rate may change, but how often can this happen? If it goes up, by how much will the mortgage rate rise? Is there anyway I can control (lock in) how far it will go up. Will the mortgage rate ever go down? Will I get that benefit of a lower payment if it does drop? What happens if it goes up too much and I have trouble making the payments? What is the total amount of interest on the mortgage that I will pay over the years? Consumers, this is a very, very important bit of information.

What is the term in years of your various mortgage products? Be careful here, you could be facing a "short mortgage''. Under present conditions, at age 65, your mortgage must be paid off; thus if you are 55, you can only get a ten-year term! Please tell me why, in the Bermudian economic environment where every able bodied person works many well into their 80s, where did this artificial limit of 65 come from? Bermudians are a long-lived people! Sorry, mortgage lenders (and employers) this is age discrimination.

Can I put a younger relative on the mortgage with me to get a longer term to pay? See comments above.

What are my closing costs? How do you figure these out? Can I choose my own lawyer to draw up the mortgage document? What additional closing costs will I have to pay, i.e. a structural survey, a title registration search, etc. How am I going to pay for these extra closing costs if I only have enough for a downpayment? What percentage of the appraised value of the property or the purchase price will you loan to me? Is this actually my down payment? How do you calculate this? This is a tricky one because different appraisers may come in with different fair market values on the same house. And who pays if you have to have more than one appraisal? Would you consider giving me a mortgage without any down payment? Have you ever done so, under the right circumstances? If I get some extra money, say a bonus, can I pay down part of the mortgage early? What will it cost me to do this, extra interest? Do I have to give you any kind of notice, say two or three months? What is the advantage of paying down the principal on my mortgage early? Do my payments drop or does the term of the mortgage shorten? Do I have to carry home insurance? On what value? Can I choose my own insurance company? Can you pay my land tax and insurance for me? Can this be added to my mortgage payment? Do I have to carry mortgage insurance, just in case one of us dies unexpectedly? If the mortgage lender says it is not necessary, how will you plan to cover this mortgage in the event of untimely death of one of you? The home I want to buy has an apartment with it. Will you count the rental income I make against the mortgage? What happens if I can't keep it rented? How much of my (and my spouse's) gross income has to go to pay this mortgage? Look long and hard at this one. A mortgage lasts a long time. You may have to practise really good financial planning and want this home very badly; it may mean giving up "lots of the little comfort purchases and putting all of your energy into this new home''. Ask yourself if you have the discipline long-term to do this.

What other future costs do I have? Do I have to pay a processing cost each month? How much is it and what percentage of the mortgage does that work out to be? Have you ever done a reverse mortgage? My Grannie is 87 years old, debt free, but she is living on social insurance. I am concerned she is deteriorating rather rapidly.

Even though I may make every payment on time, do you have the right to call my mortgage? (Calling means the lender can demand full payment at any time, if it is a term of the mortgage).

If I miss a payment or I am late what is the late charge? What is that in percentage terms? Let's say I develop a serious illness or my spouse loses her job, what can I do to work out a different loan payment? If I can't meet my payments how long will it be before you move to take my home back? Do you have the right to sell my mortgage to another lender? Have you ever foreclosed on a client? Besides the obvious, not paying, are there other reasons that you may foreclose on? Please explain the foreclosure process clearly to me. For instance, what kind of a price do you try to get? Is it enough to pay off the mortgage that I owe and what happens to the difference. Do I get that? What extra charges are there from you that you may deduct if you decide to foreclose? Take the time to ask lots of questions to fully understand what the terms and conditions mean to you.

Bermudian dream: Owning your own home is every Bermudian's dream, but there are important questions to ask mortgage lenders.