Buying a home for the first time can be overwhelming. The best way to avoid getting into any mortgage mishaps is to do your homework first.
Buying a home is one of the biggest financial commitments you'll ever make. Probably the most daunting part of the process is applying for a mortgage – and even the smartest among us have slipped up along the way.
If you're thinking of buying a home in the near future, here are some tips on how you can avoid some common mistakes that first-time buyers make when they go for a mortgage.
• Know your credit rating. Many first-time buyers are unaware of where they stand credit-wise. If you have a good credit rating, you have a better chance of qualifying for a mortgage. So rather than crossing your fingers when you go into the bank and hoping you'll be approved, get a copy of your credit report in advance. This way, you'll know exactly where you stand. You can get it for free by mail through Equifax Canada or pay a fee to access it right away online.
• Do some comparison shopping. Your first instinct will likely be to go with your home bank branch – and that's a good place to start. But using a mortgage broker will allow you to shop and many different banks to get you the best rates and will effect your credit score less in the long run.
• It's not always about the interest rate. While it would be ideal to get a low rate on your mortgage, that's not always going to save you money in the long run. You need to take into account other factors like the cost of the home, the type of mortgage (i.e. fixed or variable), the amortization period, as well as the type of payment plans available.
• Get pre-approved. When you get pre-approved for a mortgage, you know exactly what price of home you can afford. It also puts you in a better bargaining position against competitive bidders when you go to put in an offer on a house (fewer conditions to contend with).
• Don't feel you have to use the full amount you were pre-approved for. As thrilling as it might be to be approved for a $650,000 mortgage, you still need to be prepared to handle the payments that go with it. It's better to play it safe and stick to the amount you've budgeted for – don't get in over your head.
• Remember to take closing costs into account. This one can often take first-time buyers by surprise. After the mortgage is approved and the down payment is made, you need to make sure you set aside reserve funds to cover the costs of the home inspection, lawyer fees, land transfer and property taxes, property insurance and of course, the cost to move into your new home.
The best way to avoid getting into any mortgage mishaps is to do your homework first. Talk to the mortgage specialist at your bank, your real estate agent, and friends or coworkers who have been through the experience themselves (and learned the hard way). And don't be afraid to ask as many questions as you need to! This is a big decision, and you're entitled to know everything you're getting into before you sign on the dotted line.
If you're thinking of buying a home in the near future, here are some tips on how you can avoid some common mistakes that first-time buyers make when they go for a mortgage.
• Know your credit rating. Many first-time buyers are unaware of where they stand credit-wise. If you have a good credit rating, you have a better chance of qualifying for a mortgage. So rather than crossing your fingers when you go into the bank and hoping you'll be approved, get a copy of your credit report in advance. This way, you'll know exactly where you stand. You can get it for free by mail through Equifax Canada or pay a fee to access it right away online.
• Do some comparison shopping. Your first instinct will likely be to go with your home bank branch – and that's a good place to start. But using a mortgage broker will allow you to shop and many different banks to get you the best rates and will effect your credit score less in the long run.
• It's not always about the interest rate. While it would be ideal to get a low rate on your mortgage, that's not always going to save you money in the long run. You need to take into account other factors like the cost of the home, the type of mortgage (i.e. fixed or variable), the amortization period, as well as the type of payment plans available.
• Get pre-approved. When you get pre-approved for a mortgage, you know exactly what price of home you can afford. It also puts you in a better bargaining position against competitive bidders when you go to put in an offer on a house (fewer conditions to contend with).
• Don't feel you have to use the full amount you were pre-approved for. As thrilling as it might be to be approved for a $650,000 mortgage, you still need to be prepared to handle the payments that go with it. It's better to play it safe and stick to the amount you've budgeted for – don't get in over your head.
• Remember to take closing costs into account. This one can often take first-time buyers by surprise. After the mortgage is approved and the down payment is made, you need to make sure you set aside reserve funds to cover the costs of the home inspection, lawyer fees, land transfer and property taxes, property insurance and of course, the cost to move into your new home.
The best way to avoid getting into any mortgage mishaps is to do your homework first. Talk to the mortgage specialist at your bank, your real estate agent, and friends or coworkers who have been through the experience themselves (and learned the hard way). And don't be afraid to ask as many questions as you need to! This is a big decision, and you're entitled to know everything you're getting into before you sign on the dotted line.
Kelowna Real Estate, Mortgage Brokers and Realtors. Houses.
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