While securing a loan is fairly simple, repaying can be skin-prickling. Buying your own house is one of the best choices you will ever make but it comes with its fair share of downsides. The rule of thumb is finding a deal that will hugely cut down on costs. Because even insignificant interest rates may hugely impact the overall loan costs. Sounds Difficult? Not it is not. Here is how:
- Evaluate Your Credit Score
Your creditworthiness is one of the key factors to securing low mortgage rates in Quebec
. Lenders use it to determine whether you are eligible for the loan or not, and how much you will be charged. That is why borrowers with higher credit scores land lower mortgage and other better offers. Your credit score, however, won’t be the deal breaker depending on the person you are working with.
- Reach out to a Mortgage Broker
Hiring someone to work on your behalf frees you from the rigors of personally securing a mortgage deal. That is why many Canadians seek advice from brokers as opposed to doing it personally. The good thing is; brokers go a great way to help you negotiate the lending terms and secure friendly deals. They contact major banks or private lenders to negotiate. In fact, there are banks that have several mortgage agents who will help you get a better deal.
- Look at Different Mortgage Types
If you closely work with a broker, they will educate you on the suitable mortgage types. They are two-pronged, including the fixed-rate mortgage rate and an adjustable-rate mortgage.
For a fixed-mortgage rate, the applied interest rates are stagnant throughout the loan term. It is a good idea if you are on a fixed payroll and you would want to commit part of your finances to it.
On the other hand, an adjustable-rate mortgage has variable interest rates that change periodically. Since mortgage rates vary, this option is favorable particularly when your broker is convinced that the rates will fall soon.
- Keep in Mind all the Costs
Since the process of securing mortgage revolves around money; you will have to keep a close eye on the cash flow. Lower rates typically come along with higher fees; forcing you to spend more. You, therefore, have to carefully evaluate all the available options including underwriting fees, closing costs, and loan origination to be on the safe side. You should also seek information on pre-payment penalties and the consequences of ending the mortgage early.
- Obtain a Pre-approval Letter
After deciding your mortgage lender and the layout of terms, ensure you receive a pre-approval letter. This involves a credit check, income verification and verification of your down payment. Also, make sure you put in writing to close the deal. In Canada, it takes up to 120 days after obtaining a pre-approval to buy a home.
In summary, while the process of securing a mortgage loan is mind-exhausting, option to use a broker eases the pressure. That way, all you all do is evaluate the information in advance to make sure that you are prepared for a favorable offer.