Financing A Home

Finances

You need to assess your current financial position and determine how much you can afford to spend purchasing a house - which can be a complicated process for anyone. The best way to examine your finances and calculate how much mortgage you can afford is to contact your financial institution and in the interim, use the Mortgage Calculator available on this site to gain some insight on approximate payment amounts.

Get the Right Information

Whether you are about to buy your first home, or are planning to make a move to your next home, it is critical that you inform yourself about the factors involved. Industry research has revealed that there are six common mistakes that most homebuyers make in mortgage shopping that can have a significant impact on the outcome of this critical negotiation. Even small differences in the way you structure your mortgage can literally cost or save you thousands of dollars and years of expense.

What you Must Know Before Obtaining a Mortgage

Before you commit your hard earned dollars to monthly mortgage payments, consider these six issues. Effective consideration of these important areas can make your payments work much harder for you.

• You can, and should, get pre-approved for a mortgage before you go looking for a home A Pre-Approved mortgage is something you really should do prior to actively searching for a house and there is no time like the present. Do not procrastinate here if you're seriously in the market; your dream home may come and . . . go if you are not prepared. In conjunction with the process of obtaining a Pre-Approved mortgage, you will also establish your financial position thereby completing two financial tasks in one swoop. Obtaining a pre-approved mortgage costs you nothing. It puts you under no obligation, and at the end of the process you'll know how much mortgage you can reasonably afford to buy a home.
  
  When you book the appointment, make sure to ask the Mortgage Specialist what information they require in order to process your application. This way, you will be fully prepared and have all the documentation they require when you arrive for your pre-approval meeting. Based upon the outcome of this meeting, your lending institution can further provide you with written pre-approval all quite easily. A word of caution, a verbal pre-approval from your lending institution is not the same as a written pre-approval.
  
  The written pre-approval entails a completed credit application, proof of documentation and credit analysis to establish your beacon score. A verbal pre-approval has no contractual agreement or guarantee and your lending institution is not bound to honor it when you find the home you've been looking for. Talk directly to your lending institution for further and more specific clarification.
  
  
• Know what monthly dollar amount you feel comfortable committing to when you discuss mortgage pre-approval with your lending institution, find out what level you qualify for, but also pre-assess for yourself what monthly dollar amount you feel comfortable committing to. Your situation may give you a pre-approval amount that is higher (or lower) than the amount of money you would want to pay out each month. By working diligently with your lending institution to determine what this monthly amount is, and what value of home this translates into at today's rates, you won't waste time looking at homes that are not in your price range.
  
  
• You should be thinking about your long term goals, and expected situation, to determine the type of mortgage that will best suit your needs. There are a number of questions you should be asking yourself before you commit to a certain type of mortgage.
  • How long do you think you will own this home?
  • What direction are interest rates going in and how quickly?
  • Is your income expected to change (up or down) in the near future, impacting how much money you can afford to pay to your mortgage?

The answers to these and other questions will help you determine the most appropriate mortgage you should be seeking.

• Make sure you understand what prepayment privileges and payment frequency options are available to you More frequent payments (for example weekly or biweekly) can literally shave years off your mortgage. Simply by structuring your payments so that they come out more frequently, will drastically lessen the amount of interest that you will be charged over the term.
  
  For the same reason, authorized pre-payment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay and could shorten your payment term considerably. These two payment options can cut years off your mortgage, and save you thousands of dollars in interest. However, not every mortgage has these pre-payment privileges built in, so make sure you ask for them. They may not be automatically included or offered.
  
  
• Ask if your mortgage is both portable and/or assumable A portable mortgage, where available, is one that you can carry with you when you buy your next home and avoid paying any discharge penalties. This means that you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home. Please be aware that a portable mortgage still requires approval to move from one property to another. Never assume that the approval will be automatic. When you are thinking about moving, always discuss the portable mortgage with your lending institution to confirm;
  • You will get approval to (portable) the mortgage.
  • How the mortgage will (portable) from the property you are selling to the property you are purchasing.
    
    

An assumable mortgage is one that the buyer for your home can take over when you move to your next home. This can be a very powerful tool at the negotiating table making it much easier and more desirable for a buyer to buy your home, and again saves you any discharge penalties.

• You should seriously consider dealing with a mortgage expert consider dealing only with a professional who specializes in mortgages. Enlisting their services can make a significant difference in the cost and effectiveness of the mortgage you obtain. For example they can make the process faster thereby avoiding costly delays. Typically there is no cost or obligation to inquire.

 

To get started, you can use our Mortgage Calculators.