Home buying season is fast approaching as spring knocks. You must have pondered over the idea of moving into your own home from a rented one bedroom den or about buying a bigger home. But before you call a Mortgage broker, take a deep breath and get familiar with some important concepts you must know. After all, it’s not a cakewalk to get best mortgage rates.
The Mortgage Division, the leading Mortgage Brokers in Mississauga recommends that you ask yourself a series of question before you make the call. These questions will give you a clarity as to what exactly you want and what to expect.
What’ll be the rate and term?
Your decision to go for a fixed term fixed rate mortgage or a variable term and rate mortgage can influence how much you’ll save in the long term. Fixed term fixed rate mortgage costs more basis points as compared to fixed term variable rate mortgage. That’s because fixed rate mortgage insulates borrowers against future hike in bank rates. However, that’ll also prevent borrowers to take advantage of low mortgage rates in the future as well.
What are the refinance restrictions?
It’s always good to keep the option of refinance open to benefit from future low mortgage rates. It’s also important to take advantage of equity in your home. Therefore, it’s advisable that you must know the refinance penalties for different types of mortgages and for different lenders. How many basis points will be charged as penalty? Can you go for refinance early in the contract?
Usually, if you go for refinancing mortgage in case of fixed rate fixed term mortgage, you’ll be charged more basis points as compared to variable term and rate. A lot depends on equity in your home. More the equity, more the penalty. Just calculate if the penalty is less or more than the savings you expect on refinance.
Whether the property is your first home, second home, or a property you wish to lease?
You get the best mortgage rates on your first home while you may be charged up to 25 basis points more on the property you wish to lease and not use for residential purpose. As for your second home, a lot depends on your credit score.
These are the main three questions you must ask yourself before you look for lenders. For more information on the best mortgage rates, visit The Mortgage Division, the most reputed Mortgage Brokers in Mississauga.
