Perhaps you have good credit, a down payment and qualifying for financing will not be a problem, but you want the best mortgage for your needs, and of course, the lowest interest rate available. Sound like you? Read on . . .
Or maybe you just have no idea what you qualify for, this is your first purchase and you just want to learn how to get started (on the right foot). Well, read on . . .
Below is a brief outline of some basic components of getting financing and some tips to get you well ahead of the game.
Although getting you approved for your mortgage may be your number one priority, a bank will work with you to make sure that whatever you end up with suits your lifestyle and matches your long term goals.
Some banks even have access to alternative lending sources that may be able to help if your credit is less than perfect or a transaction is out of the ordinary. Ask your banker to find out which options they provide.
One of the greatest advantages of using a mortgage broker is that they work with hundreds of unique situations, often have friends in the right places and know some tricks to ensure your mortgage gets the green light. If a traditional bank denies you, a mortgage broker might be able to help.
- Private Lenders – some lenders will work with high risk clients and simply charge a higher interest rate
- Joint Ventures - get someone else to front the money for the home and you split the future returns
- Vendor Take Backs – Have the owner carry the mortgage
- Assumable Mortgages – Agree to take-over the existing mortgage (only available in certain places)
- Other Options – Combinations of the above and others unique to the particular laws governing the area
Don’t let everyone pull your credit rating, have the bank run some hypothetical examples and once you find one or two you trust, then pull the details. The more times your credit is pulled, the lower your credit rating becomes. Get pre-approved and lock into an interest rate. Some lenders will hold a rate for up to 120 days. If the rate is lower when you take possession, you get the lower rate anyway. Don’t get caught if rates climb. Be careful whose advice you take. Some REALTORS® are paid incentives based on the business they send a mortgage broker. Ask your REALTOR® why they recommend someone and if they receive an incentive. Review the terms of your mortgage in depth and be sure you understand the pay-out options, conditions, interest rates, etc. It can be a nasty surprise if your payment suddenly jumps or you have a large penalty for getting out early.
If you are not approved, ask why not and find out what options you have to get approved (if they can’t tell you then find someone else). Sometimes it would just take an additional letter from an employer or something simple to remedy. There is always a way.
Source: Lindsey Smith of the Entyro Service Group in Calgary AB