To most new homebuyers there is an almost overwhelming amount of insecurity.What kind of house?How big?What about furnishings and appliances?Decorating?The decisions can seem endless and one of the first and probably the scariest is the mortgage.It needn’t be so frightening; just do your homework.
It is not necessary to have a house or property in mind before you start looking.Finding the home you want is usually not a difficult task.Getting pre approved for a mortgage should be your first priority.To do this, you will have to make a full financial disclosure to the person loaning the money or the agent.Be honest with yourself and never, ever bank on that raise “coming through”.Be conservative with your income and liberal with your expenses.It will do you well in the long run.
Mortgage Broker or a Financial Institution?Now that is a question most people don’t even to begin to address.They often just show up at their favourite bank and go through the financial details with the banker and get a pre approval.They very well could be spending money on their monthly payments that are unnecessary.Similarly, shopping around can be just as bad.The reason?Each time you file an application for credit, the financial institution does a credit check and that is recorded on your credit history that there was an inquiry.Too many in a short period of time can reflect badly on your credit rating.
The answer is to shop around for the best rates before you start.You can do this online at Compare Village, through the newspapers, or even better still, contact a mortgage broker.
The mortgage broker is an agent usually licensed by the province who has access to the financial lenders.S/he will first do a credit check on your behalf.Once that is done, s/he will contact the lenders to get the best rate and terms for the mortgage you can afford.This eliminates the multiple credit checks and saves you a lot of shoe leather.It is simply, one stop shopping.The broker is there to work for you and they get paid by the financial institution once the deal is sealed.
This gives the buyer the assurance of the best rate and terms as well as a ceiling for how much can be spent before even contacting a real estate agent or other seller.The buyer is confident in how much to spend and know that the payments will be made comfortably and that the contracts are standard or even better than what you would normally sign.The rates are often less than you would get yourself if you were to approach the lender personally.It is worth your while, especially for a first time buyer.
Renewing your mortgage can be done through a broker and until you have significant equity of 50% or better in your home, is probably well advised.Once you have that equity, lenders are more likely to give you favourable terms on renewal.Even so, don’t rule out the broker.
Remember that you are the buyer and have the power to say who is going to get your money.Exercise that right.