For the vast majority of homebuyers, a mortgage is an essential part of the purchasing process.
Your choices today will impact your finances for years to come.
Understanding mortgages better can help you make informed decisions.
Ultimately, it can help you make the most of your real estate investment.
RE/MAX has put together some important information about mortgages.
1. Get Organized
Prepare the necessary documents in advance.
This will save you time and ensure a smooth application process.
Depending on the type of mortgage you’re applying for and your employment situation, various documents may be necessary.
2. Check Your Credit Rating
Before you apply for a mortgage, be proactive and get a copy of your credit report.
Once you have it, thoroughly check for errors and other items which may need to be addressed.
Your ability to get a lower mortgage rate largely depends on the information contained in your credit report, so it’s important to ensure that all the information is correct.
3. Get the Stamp of Pre-Approval
How much can you afford?
Getting pre-approved for a mortgage helps you understand how much you can borrow before going through the mortgage application process.
This is an important step, as it will help to determine the upper price limit of your house purchase.
It will provide some realistic boundaries instead of blindly diving headfirst into the process.
4. Consider the Future
Your mortgage should be planned in accordance with your future.
It’s important to think about things like:
- how long you’re planning on staying in the house
- whether or not you should consider saving for a larger down payment
- and how much of a risk you are willing to take
Your plans may change, but the end goal should always be to reduce financial risks.
5. Different Types of Mortgages
If you’re reading this, you know that it’s important to be well informed prior to applying for a mortgage.
Understanding what your options are, along with knowing the procedures involved will be hugely beneficial to your plans and finances.
Here’s a look at different mortgage types:
If you have 20% or more as a down payment on the property, your bank lender will offer you a conventional mortgage.
This type of mortgage will allow you to borrow more than 80% of the property’s purchase price.
Keep in mind that with this option, you will also have to pay mortgage loan default insurance.
Vendor Take-Back Mortgage
It means that the seller helps the buyer purchase the property using a portion of the purchase price.
This type of mortgage is more common when interest rates are higher.
This type of mortgage is less common.
This type of mortgage allows the buyer to take over the same monthly payments at the same interest rate the seller was paying until the term is completed.
At that point, the buyer will need to qualify for a new mortgage.
This type of mortgage is restricted to housing co-ops in most cases, and occasionally condos.
With this type of mortgage, the owners of the units will pay their own portion of the mortgage.
This is done either by qualifying for a portion of the blanket mortgage or by obtaining their own mortgage.
A portable mortgage allows you to transfer the mortgage from one property to another without penalty
Being well informed and educated on the mortgage application process is important when it comes time for you to apply.
Understanding your options will be greatly beneficial seeing as this is one of the most important steps in your home buying journey.
If you have questions about applying for your mortgage, or the different options available to you, please reach out.
Need more info on South Surrey Real Estate?
If you have additional questions about mortgages or would like to know more about South Surrey Real Estate or the surrounding areas, please contact me.