Fixed Rate vs. Variable Rate

FIXED RATE
A "fixed rate" mortgage simply means that the interest rate on the money you borrow stays at a locked or "fixed" rate. This means that your interest rate is not subject to change and the rate at which you pay back your loan is always the same. There are some advantages to having a fixed rate when you consider the nature of the inflation rate. The value of your home should continue to increase year to year while the principle amount will continue to decrease.

VARIABLE RATE
A "variable rate" mortgage or below prime rate mortgage is a mortgage where the interest rate is subject to change depending on the prime rate. Most of these mortgage products are based on a formula using the prime interest rate less a discount. For example, if you choose a below prime rate mortgage with a rate of Prime minus 0.5% then your rate would be calculated at any given time using this formula. So if prime were 4% then the interest rate on your mortgage would be 3.5%.

When Applying for your Mortgage

When applying for your mortgage it is beneficial to have the following information readily available:

• A current salary statement or letter from your employer
• A confirmation such as a letter or bank statement showing the source of your down payment
• Financial statements for the last three years and personal income tax returns if you are self employed
• A copy of the accepted purchase offer
• Details on the property being purchased such a land survey or an MLS print out
• Building plans, specifications, and the builder agreement if you are buying a home that is to be constructed

Before Looking to Purchase Get Pre-Approved!

It is always a good idea to get pre-approved (or pre-qualified) for a mortgage before you decide to look at a new home.

A pre-approval will not only let you know if and for how much you are approved for, but also gives you better negotiating power and will to keep you within your budget.

Knowing that you are a serious buyer because you have already made that first important step, many home sellers will consider reducing a listed price to match your approved budget.

And by knowing how much your monthly payments are, you can then easily factor in additional cost like property taxes, utilities and insurance.

Another major advantage to pre-qualification is the rate hold. A rate hold means that you can secure an interest rate at today's current rates and keep these rates for up to 120 days or a full year on new construction. Even if interest rates drop during that time, you will still automatically qualify at the new lower rates. And, if the rates should ever go up, you would then get the secured rate.

Alberta Equity Mortgage Consultants

Our qualified and professional mortgage consultants offer personalized service to all of our clients. They are extremely knowledgeable and will offer:

• The most competitive rates while dealing with all the major lending institutions
• The maximum amount of flexibility in financing choices
• The widest choice of mortgage options including variable rate mortgages, fixed rate mortgages, capped variable rates, rental properties, mortgages for the self-employed, etc.

The advice and counseling needed to sort out credit and assess mortgage qualifications.