Rational Negotiations

An article published by Harvard Business School entitled When Not to Trust Your Gut just caught my eye this morning. There is an intuition test that is astonishing. 2 tables are placed in a graphic that are identical, but they don't appear that way at all. This graphic is used to illustrate the point that our intuition is not always trustworthy.
When applying for a mortgage, it's best to make a list of what the goals of the financing are. When purchasing this may, on the face of it, seem very easy - "I want to buy the property". It does take some more thought than that. How long do you intend to stay in the home? What are your plans after that? Do you want to keep it as a rental, a second home, is another member of your family, perhaps a child, going to live there? Also things to keep in mind are whether your income will increase, or decrease in the future, will your spouse start working or stop working during the term of the mortgage? And if so, when? What are your other investment plans? Do you plan on investing in another fashion that may allow you pay down the mortgage or pay it off entirely. When will this happen?
When refinancing, this is equally important. You really need to have some specific goals when refinancing your home. Are you paying off higher interest credit cards, is your current mortgage going to adjust to a higher rate soon? How long are you going to stay in the property? What the principal balance of your current mortgage? Sometimes the costs don't justify a refinancing even if your payment is going to be lower. Are you going to improve the property or make some large purchase? When refinancing for this purpose, try to envision other large ticket items that you may purchase in the future and get the funds to act on those as well, as the closing costs can add up if you refinance year after year.
The Harvard Business School article makes for a very interesting read, it is aimed more at business negotiations than at mortgage financing, but many of the concepts apply.