For many who are looking to buy a home obtaining a mortgage is a must. Most probably start by googing different interest rates figuring out what banks are offering. Banks don't always have the best rates. For more advice and a series of better rates, many opt for a mortgage broker at least that's what Lauren Chender did, according to a recent article in The Globe and Mail. But finding a good rate doesn't put an end to the decisions - variable vs. fixed? amortization period? “It’s overwhelming,” says Chender, who wound up using a broker to secure the mortgage on her semi-detached Victorian. “There was a lot to know.”
Pre-Approved
The mortgage process can be daunting but it is wise to get pre-approved before you start house hunting you can get an idea on your budget. In order to get pre-approved, lenders factor in your income, type of job and credit history. They also take into account how much you have to put toward a down payment, and any other debts you may have. The amount you are pre-approved for is the upper limit of what the lender will allow you to borrow. Add that to your down payment, and you’ve got the total amount you have to put toward a home.
Lenders
When looking at lenders, prospective buyers often look to banks but then utilize a mortgage broker to help you shop around for a competitive rate with other lenders (another opinion never hurts).
The specifics of the mortgage you select will depend on what makes the most financial sense, as well as your personal preference. One important decision is whether to go with a fixed rate of interest, which is locked in for the entire term of the mortgage (usually five years), or a variable rate, which can change depending on market forces.
Mortgage Renewal
When your mortgage is up for renewal, it may be tempting to simply sign on the dotted line, and accept whatever package your lender offers you. However, not shopping around can cost you. “The bank relies on people just to sign the renewal agreement at posted rates. As soon as you do that, you’ve lost thousands of dollars by not negotiating,” advises Vancouver mortgage broker Alma Pasic. Don’t be surprised if you need a refresher course. “It’s like you’re doing it for the first time, because everything has changed,” she says. “It’s hard to keep up–even for us.”
Overall it helps to do your research first and shop around rather than just stopping at your first choice. There are many options right now in today's market, you might as well take advantage of them.
More on this topic:
