What You Need To Know Before Getting a Mortgage

By: Nathaniel Hilson

If you think youíre just about ready to buy a new house soon Ė or at least in the foreseeable future Ė itís highly recommended that you do a crash course in mortgage loans in Canada as well. After all, by learning (or rediscovering, whichever the case may be) a few essential things about it, you can make better informed decisions, and your home buying process will run noticeably smoother than if you just plunged headfirst without a second thought. Here are some helpful things you can keep in mind:

Itís best to have a good credit.

Mortgage loans in Ontario Ė and anywhere else, for that matter Ė are big decisions, both for you and the bank youíre applying to. That is why, for you to land one in the first place, you need to have a good credit standing. Of course, you can always try for a loan even with a less than stellar record; however, your chances of getting qualified will be much slimmer.

Realistically determine your finances.

Knowing how much you can afford is very important. For one thing, it will prevent you from getting buried under a daunting amount of debt. Secondly, it will help mortgage services in Ontario put more trust in you, because they can assess that you have the ability to pay. It wonít be a bad idea, therefore, to grab your calculator and start doing your own calculations on how much exactly you can afford to shoulder.

Pay attention if youíre a first time home buyer.

If itís youíre first time buying a residence, you may be qualified to apply for a special mortgage reserved for first time home buyers. You may find this very helpful; but then again you may also not. The point is, it wouldnít hurt to go over such programs and take advantage of them if they will help you get a better deal.

Consider refinancing your mortgage.

Circumstances change, and sometimes they do for the better. If mortgage rates were revised, or if your credit standing improved, mortgage refinance in Canada can easily prove to be a good option. Do your research and find out how it can work for you.

Decide on the length of your mortgage.
If youíve already found your dream home, you may want to settle for a 30-year fixed rate mortgage. This is your safest bet if you plan to stay there for more than five years, anyway. A fixed rate loan will also help you plan your finances in the long term, because you have an idea how much you need to churn out on a monthly or yearly basis to cover expected bills.

Ask yourself if you can handle a riskier loan.

For self-employed people or those who may have their own start-up ventures, having unpredictable Ė albeit adequate Ė income can be enough triggers to consider more creative layouts in a mortgage. If youíre a real estate investor, for instance, you can opt to go for an interest only, adjustable rate, or negative amortization mortgage. This will allow you more flexibility, but remember that you can get in trouble if you donít analyze all the risks it entails. Study each type of mortgage carefully, and know what would suit you best.

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