March 2, 2016
Don’t Make These 5 Mortgage Mistakes!
Most people only buy a home a few times in their lives. It’s hard to be an expert on buying a home without being an agent yourself, since you only need to know the ins and outs a few infrequent times.
And sometimes more complicated than buying a home is dealing with your mortgage. There are a bunch of small mistakes homebuyers make that could cost them.
To make sure you’re prepared, here are five common mistakes you should avoid:
- Not seeking pre-approval
You might think you’re a shoo-in for the mortgage you need, but there could be something in your way that you don’t know about. It’s best to speak with a lender before you even begin your home search. You can apply for the loan before you buy and your mortgage provider will verify your credit and information so you have peace-of-mind while searching. And if she does find something, you can address it head-on before it becomes a problem.
As a bonus, most providers will hold your pre-approved rate for up to 120 days, meaning if rates go up while you look for your next home, you still get the lower rate. But if they go down, you can get that lower rate. (Not bad, right?)
- Sticking with the first/easiest lender
If you think your bank is going to offer you the best rate available, you’d be wrong. Your bank might have the lowest rate,—and if you’ve been with them a long time, they might fight to get you a competitive rate—but chances are there’s a better deal out there. Shop around with other banks and smaller lenders to actually find the best mortgage rate.
- Waiting for mortgage rates to change
If you shop around and find the lowest rate is still not that low (according to you), don’t wait for a lower rate to show up. Ottawa has made mortgage rules tighter over the last decade, and the Canadian housing market doesn’t show any signs of slowing down. For all you know, rates could go up, not down, so waiting could be the exact wrong course of action.
- Changing your credit or employment
While you may think your mortgage and rate are guaranteed when you’re pre-approved, there are exceptions. Your lender pre-approves you based on your conditions at that time, so if you change jobs, apply for more credit, or use more credit, that could affect your approval. There are also other reasons your pre-approval could be revoked that deal with the property itself, like if it’s a heritage property. Speak with your mortgage provider about further details on your pre-approval.
- Not considering closing costs and other expenses
There are more costs other than just your down payment that you need to keep in mind. Closing costs, for example, includes legal fees, land transfer tax, and other costs, all of which can total 4% of your purchase price. There are also monthly fees like condo fees that come into play, as well as moving costs, repairs, or major replacements.
Unsplash: Padurariu Alexandru