What Questions Should You Be Asking When Trying to Secure Your First Mortgage
Securing a mortgage is a big decision that can have lasting economic consequences in your life. You should take the time to understand the intricacies involved before signing the loan contract. Before taking out your first mortgage in Edmonton, ask for advice from a seasoned mortgage broker.
But finding a mortgage company is not enough. It’s essential to arm yourself with the right questions to make the best out of the discussion with your broker. If you are looking to secure your first mortgage, seek answers to the following questions.
How Does the Mortgage Application Process Work?
As a new homebuyer, the details inherent to securing your first mortgage and using it to purchase a property may be perplexing. Your mortgage broker should elaborate on the legal and administrative procedures that you’ll need to follow. Understanding the process will help you to think through your current financial responsibilities and plan.
Which is the Best Type of Loan for Me?
Some mortgage lenders will give a loan without explaining why they think it suits you. Before accepting any offers, ask your mortgage broker to enlighten you on all the available mortgage options in depth. They should explain the pros and cons of each and clarify why they think a particular option is better than others.
For instance, taking a fixed-rate loan means your interest will never change. Conversely, the rate for an adjustable-rate mortgage will fluctuate depending on the market. Your lender or mortgage broker should explain what these differences imply.
How Much Down Payment Should I Have Saved?
The minimum down payment in Canada is 5%. If you have 20% down payment buyers can avoid default insurance (CMHC). Upon qualification the down payment can be your own savings, gifted, or it can be borrowed. Contact me to see if you qualify for these options.
Default insurance is required in Canada when you have less than 20% down payment. This is a premium paid on your mortgage amount which is included in your monthly payments.
How Much Are the Total Costs?
On top of your down payment there a few extra costs you need to budget for. Some areas that your mortgage broker should highlight include appraisals, inspection reports, and property taxes, among others. Ask for an estimate of all costs before applying for the loan.
Can I Lock in a Rate?
A rate hold is an agreement between a mortgage lender and a borrower to keep the interest rate held for up to 120 days. This period may be between the date of mortgage approval and the possession of the property.
Rate holds are beneficial when interest rates are rising. Rate holds protect the borrower from mortgage rates increasing when they are out shopping for a property. If interest rates decrease within that time frame borrowers will receive the lower rate.
How Long Will It Take to Get Approved?
Banks may have different loan processing timelines depending on various factors. Talk to your broker about appropriate timeline for when you make an offer on a house. Being as prepared as possible will help speed up the process.
Securing Your First Mortgage Edmonton
Acquiring a home can be confusing if you aren’t familiar with the process.
Before applying for your first mortgage in the Edmonton area, don’t hesitate to consult Jamie Arthurs Mortgages. I have been supporting homebuyers in Alberta with professional advice and mortgage services since 2008.