Applying for a mortgage and becoming a home buyer can seem
overwhelming — especially if it’s your first time. Here are some of the most common pitfalls that you can fall into...... and how to deal with them, so
that you can feel confident and prepared to take the first steps towards
homeownership.
Here are some of the pitfalls a mortgage specialist can help you avoid.
Not knowing your credit rating. Lenders can use your credit rating to verify your repayment history. If your credit rating needs improvement to help you qualify for loans, you can improve your score by always making at least the minimum payments on your credit cards, loans or utility bills in a timely fashion. Checking your history is easy! Simply ask for a copy of your credit rating at either www.equifax.ca or www.tuc.ca. A small fee will apply.
Being unrealistic about how much you can afford to pay for your home. You may be under or over-estimating how much you can afford to pay for your home. Contact a mortgage specialist. They can quickly help you determine how much you can afford and answer any questions you might have.
Not considering a mortgage pre-approval. Knowing the amount you will be approved for gives you the confidence to begin looking at homes within your price range. As long as you earn sufficient income and have no major credit issues or large debt, you should be pre-approved for a mortgage.
Assuming you will not qualify for a mortgage. Have you ever been declined for a mortgage for any reason, even bankruptcy, and still dream of owning your own home? If you don’t qualify for a mortgage, your mortgage specialist may still be able to help you get the home of your dreams by finding an alternative mortgage solution. Although an alternative mortgage may cost a little more initially, once your credit situation has improved we may be able to help you lower your mortgage cost in the future.
Not knowing all the down payment choices. You’ll be glad to know that there are different options available depending on how much of a down payment you can afford. High-ratio mortgages have lower down payments, so they require a higher mortgage loan insurance premium. The premium is added to the amount you borrow. As a first-time homebuyer, you can also use money saved in your RSP towards a down-payment with a maximum of $25,000 per person.
Being too focused on interest rate rather than the overall solution. Your mortgage specialist is there to help you decide which mortgage solution works best for you and fits not only your budget but within your future plans. Fixed-rate, variable-rate and combination mortgages all offer their own benefits and drawbacks.
Not choosing your own mortgage payments schedule. Customize your amortization period depending on how much you can afford. Paying off your mortgage faster saves on interest costs, while a longer amortization period reduces your regular payment amount and gives you more room to manage your cash flow. A 25-year amortization period should be the starting point as stretching the amortization to 30 years can increase your total interest costs by up to 50% over the life of the mortgage.
Forgetting about closing costs and other non-banking details.
By this time, you’ve selected a house, picked your mortgage options and are getting ready to finalize everything and make an offer. This means getting down to some picky details. It helps to know what these are so you can minimize any last minute complications. Here are some things to consider and budget for:
•professional home inspection
• lawyer or notary fees
• property taxes
• property insurance
• property value
• moving costs
• ongoing costs
Owning your own home is a milestone as well as an exciting experience! How often do you get to live in and enjoy your investments? Your mortgage specialist is always available to guide you through the process. Call me at any time you have questions or want your own personal mortgage assessment or review :)
Here are some of the pitfalls a mortgage specialist can help you avoid.
Not knowing your credit rating. Lenders can use your credit rating to verify your repayment history. If your credit rating needs improvement to help you qualify for loans, you can improve your score by always making at least the minimum payments on your credit cards, loans or utility bills in a timely fashion. Checking your history is easy! Simply ask for a copy of your credit rating at either www.equifax.ca or www.tuc.ca. A small fee will apply.
Being unrealistic about how much you can afford to pay for your home. You may be under or over-estimating how much you can afford to pay for your home. Contact a mortgage specialist. They can quickly help you determine how much you can afford and answer any questions you might have.
Not considering a mortgage pre-approval. Knowing the amount you will be approved for gives you the confidence to begin looking at homes within your price range. As long as you earn sufficient income and have no major credit issues or large debt, you should be pre-approved for a mortgage.
Assuming you will not qualify for a mortgage. Have you ever been declined for a mortgage for any reason, even bankruptcy, and still dream of owning your own home? If you don’t qualify for a mortgage, your mortgage specialist may still be able to help you get the home of your dreams by finding an alternative mortgage solution. Although an alternative mortgage may cost a little more initially, once your credit situation has improved we may be able to help you lower your mortgage cost in the future.
Not knowing all the down payment choices. You’ll be glad to know that there are different options available depending on how much of a down payment you can afford. High-ratio mortgages have lower down payments, so they require a higher mortgage loan insurance premium. The premium is added to the amount you borrow. As a first-time homebuyer, you can also use money saved in your RSP towards a down-payment with a maximum of $25,000 per person.
Being too focused on interest rate rather than the overall solution. Your mortgage specialist is there to help you decide which mortgage solution works best for you and fits not only your budget but within your future plans. Fixed-rate, variable-rate and combination mortgages all offer their own benefits and drawbacks.
Not choosing your own mortgage payments schedule. Customize your amortization period depending on how much you can afford. Paying off your mortgage faster saves on interest costs, while a longer amortization period reduces your regular payment amount and gives you more room to manage your cash flow. A 25-year amortization period should be the starting point as stretching the amortization to 30 years can increase your total interest costs by up to 50% over the life of the mortgage.
Forgetting about closing costs and other non-banking details.
By this time, you’ve selected a house, picked your mortgage options and are getting ready to finalize everything and make an offer. This means getting down to some picky details. It helps to know what these are so you can minimize any last minute complications. Here are some things to consider and budget for:
•professional home inspection
• lawyer or notary fees
• property taxes
• property insurance
• property value
• moving costs
• ongoing costs
Owning your own home is a milestone as well as an exciting experience! How often do you get to live in and enjoy your investments? Your mortgage specialist is always available to guide you through the process. Call me at any time you have questions or want your own personal mortgage assessment or review :)
