Things to Know About Mortgages
Recent changes in mortgage regulations have changed the number of options available for homebuyers. The government of Canada recently changed the maximum amortization period from 30 years to 25 years for people with insured mortgages. Even though this is the case for most first time buyers, there are still a number of good mortgage options available. The good thing is that you will pay off your home sooner and save thousands in interest payments.
Getting the Correct Information
It is important to know the factors involved when you are buying or planning to move to a new home. While shopping for homes in Calgary, homebuyers need to take six factors into consideration. These factors are mostly related to the mortgage plans that they choose. Considering these factors can help you buy a less expensive mortgage which would also leave you indebted to the financial institution for a shorter period of time. It is a good idea to take a look at these six factors before you start your mortgage payments. Thinking about these things will make sure you don’t make any major mistakes.
Get a Pre-approved Mortgage Before You Look For a House
You should always try to get a pre-approval on your mortgage loan. The benefits of getting one are plentiful. In order to get a pre-approved mortgage, you need to contact your local lending institution or a mortgage broker and they will provide you with a written pre-approval. This written approval is an indication that you can afford the house and get a loan, though there are always exceptions. This preapproval is important for the sellers of the house you are interested in buying because they will know you are a serious buyer.
How Much Can You Pay Every Month?
When you are getting a pre-approval on your mortgage loan, make sure that you ask how much money you can borrow. This will give you a clear idea of how much you will have to pay back every month. The lender will use predefined formulas to figure out how much you can afford based on your income. This will help you because you won’t have to waste time looking at homes that are out of your price range.
Think About Your Long Term Goals and Other Expected Situations
You should ask yourself a few questions and answer them honestly before you sign the mortgage papers. These include questions like:
• How long will you own the house?
• Do you expect any changes in your income (good or bad)?
• How much will this change affect your ability to make your monthly mortgage payment?
• What direction are the interest rates going in?
By answering these questions, you will be able to determine and eventually find the best mortgage plan for yourself.
Understand the Available Prepayment Privileges and Payment Frequency Options
The quicker you pay off your debt, the better. By increasing the frequency of your mortgage payments you can shed off years from your mortgage. The amount of interest you are charged with will also go down if you structure your payments to make more frequent payments. Prepayment of a certain amount on your mortgage or an increase in the amount of your monthly payments will also affect the number of years on your mortgage payment and could significantly reduce the years. However, make sure that you ask your lender if these options are included in your mortgage plan.
See If Your Mortgage is Portable
If you have a portable mortgage, it can be easily transferred from your current home to your next one without any discharge penalties. This means that you do not have to go through the whole mortgage process again unless there is a significant increase in the mortgage amount.
Seriously Consider a Mortgage Specialist or Broker
It is better if you seriously consider your options and talk to a mortgage specialist or broker. They can help you get a cost effective mortgage with great features. For example, they can avoid costly delays by making the process faster and usually there is no obligation or cost to ask them about mortgage details. In addition, they work for you, not the bank.