One of the first things that you should do before you start shopping for a home is speak to a professional Mortgage Specialist. Whether you’re a first time buyer, or a seasoned home-owner, it’s important to know where you stand, what is happening with the market and what products are available to make the most of your investment.
Going through the process of Pre-Approval is critical in the home-buying process. You want to know how much you can afford before you start shopping. This way we can match your search criteria to what you are comfortable with and you don’t spend time looking at properties that may not be appropriate. Another reason this is important is that when you’ve found the home you want to place an offer on, you have already invested the time needed in the financing approval. You will be able to fulfill the financing condition of your offer a lot quicker, and you may have a competitive advantage over other buyers out there.
Types of Mortgages
There are many mortgage products to choose from so it’s best to speak to an expert, but in general, there are two types:
- Conventional – When your downpayment is equal or greater than 20% or the purchase price of the home.
- High Ratio – When your downpayment is less than 20% of the purchase price of the home. In this case the loan needs to be insured by CMHC or another insurer. The premium can be added to your total mortgage. Find out more at www.cmhc-schl.gc.ca
- Fixed Rate – These mortgages allow you to lock in your interest rate for a set period of time. Your payments stay the same and you are able to plan your budget with the piece of mind of knowing what to expect. With this type of mortgage you know exactly how much of your payment is being applied to the principle amount and how much is being applied to interest, throughout the terms of mortgage.
- Variable Rate – These mortgages are more fluid and respond to interest rates as they rise and fall in the market. Though your payment will stay the same throughout the term, the amount being applied to principle and interest will change as rates go up or down.
There are other options out there such as a Combined Fixed/Variable Rate Mortgage. Regardless of what type of mortgage you choose, it is important that you read and understand all of the terms and conditions. Above all, speak to a professional!
If you currently own a home which you are selling and purchasing a new home, the questions often comes up about closing dates. There may be a gap between the closing date on your new home and the one you just sold. If this is the case, there are options available to provide short-term financing. Again, speaking to a trusted mortgage advisor will help you get all the criteria needed to explore this option.
If you are renting and your dream of ownership seems beyond reach, take the time to talk with a professional – your dream may be closer that you think. Many financial institutions have mortgages available to suit all needs. Whether you are self-employed, have an imperfect credit history or are new to Canada, there more than likely a financing solution to meet your needs.