Mortgage Shopping Made Easy
If you’re like most people, you probably feel like shopping for a mortgage can be about as much fun as getting a root canal. But it doesn’t have to be that way. Here are some basic steps you can take to ensure that you find a mortgage that works for you.
Check Your Credit
Get a copy of your credit report from Equifax.com (or a similar service). Double-check every item listed and if there are any errors or omissions, contact your credit bureau to change them. How’s your score? One way to improve your rating is to pay off any outstanding credit card debt.
Do The Math
In order to get a picture of how much you "owe" vs how much you "own" (assets vs liabilities ratio), gather up all of your information on your assets (annual mortgage summaries, investments, stocks, bonds, debt/loans on other items such as boats/cars/toys) and add them up. Hint: it’s best when you own more than you owe. A Mortgage Broker can help you tally these numbers up and give you an idea of what you might pre-qualify for in regards to a mortgage. They will also need your T1's and Notice of Assessments for the past two years in order to assess whether you can afford to support the debt you presently carry (in addition to any future possible mortgages....)
Meet with a mortgage broker, bank or lender. They’ll ask you some questions that may point out some things you missed in your initial estimate, like liabilities – or assets you didn’t realize you had. Using all this information, they’ll give you a rough estimate of how much you can borrow. However, this informal process isn’t a guarantee or a pre-approval. It’s simply a way to help you gauge the properties you can afford and figure out if you’re ready to make this type of financial commitment.
Learn The Lingo
Familiarize yourself with mortgage terms and options by doing your homework. Talk to your REALTOR®, ask friends and family and check out all the websites and articles that have this info about amortization periods, the benefits of fixed or variable rates and more – there are lots of them.
Choose A Lender
A mortgage is one of the biggest financial commitments you can make, so it pays to shop around. Even if you have an excellent relationship with your bank, there’s no harm in exploring the option of obtaining financing from another company. Remember - banks are only one option, using a mortgage broker or researching mortgages on-line can be a more time effective and objective way to find the best interest rate and lender for you!
If you are computer savvy, many home buyers have found financing online, whether it’s through a mortgage finding service or a bricks-and-mortar institution to be both time & cost effective. You don’t have to leave your home to do it, and you can shop 24/7. The downside of doing it online is that lacks a personal touch – you may miss out on an option that you might have come across by simply speaking with someone in person.
If you're smart you will let a mortgage broker do your “shopping around” for you and find the best rate available. Once providing them with all the necessary information, they do the pavement pounding in order to find you the best mortgage. Always ensure you ask about mortgage conditions such as payout criteria, the term vs the amortization (25 yr max) of the mortgage and how much you need for a down payment (between 5-20% depending on whether you will be living in the property or renting it out). Before choosing a broker, make sure he or she isn’t affiliated with a specific bank or lending institution.
Getting mortgage pre-approval is similar to pre-qualifying, but the result is an approval from a
lender for a specific amount, locked into an interest rate for a period of time (normally 90 to 120 days).
So there you have it—the simple steps to get you closer to a mortgage that not only works for you but also gets you into the home of your dreams.
Click here if you have Questions concerning arranging a mortgage. I would love to answer your questions over a "no obligation", get-together coffee. I look forward to hearing from you......
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