101 Series: Preparation Tips for your First Mortgage – Ask a Vancouver Mortgage Broker
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Preparation Tips for your First Mortgage
One of the problems noticed by some brokers about new home buyers is that although they’ve saved for a suitable down payment, found a suitable home and had their offer accepted is that they haven’t performed sufficient background work when it comes to arranging their mortgage.
Some new prospective home buyers may easily become beguiled by the rates offered by banks or on online sites. You should be cautious about these rates which are often termed by many mortgage insiders as “sucker rates.” Many of these advertised rates comes with high fees, and other restrictions such as penalties when is comes to how you might make a lump sum payment.
These advertised rates should only be viewed as a starting point when it comes to finding a mortgage. By taking your time and performing some due diligence, a new home buyer is actually in a much better position to negotiate such things as a better term for their mortgage rate and in other areas such as fees and restrictions.
Here are 4 tips to before you come to the table and get a better deal on your mortgage.
Get Prepared Early
You will need to get yourself prepared early when acquiring a mortgage. The process is more complicated than simply filling out an application form for a pre-approved mortgage. The bank or lender will want to know your current credit score, everything about your current debt, tax assessments for at least the past 2 years, and income verification for all your income.
You also need to know that you will have to have enough cash on hand for your closing costs which can be as high as 2 percent of the home’s purchase price. A new home buyer will also have to put down a deposit for their utilities, and a condo buyer will also have to be able to handle maintenance fees for their condo.
Understand and Learn about Mortgage Basics
A mortgage broker can give you a lot of assistance and advice but it also is very helpful for you to bone up on mortgage basics. Key terms which you need to understand include fixed and variable mortgages along with what an open or closed mortgage means.
You also need to understand what is meant by pre-payment options and break fees as they are very important. You might know for example that you will come into some money down the road so you might to seriously consider a lender which has a flexible pre-payment feature.
Consider Carefully what Mortgage Options Suit you Best
If your employment situation involves the possibility of having to move to another city, you will want to carefully examine the break fees on the mortgage you’re thinking of obtaining.
Or, if you buying a home which you plan to renovate then you want o ensure that you have fairly easy access to a HELOC (Home Equity Line of Credit).
In other words, make sure you know and understand the fine print of a prospective mortgage before you sign on the dotted line.
Use your Leverage
Lenders have high regard for the first time buyer and are in fierce competition with each other. By knowing what and where you can negotiate on your mortgage can potentially save you thousands of dollars down the road.
This is a big investment you are making so doing it right by learning what you need to know and what you can negotiate with a lender can be a crucial to the decision making process.
