Should I Increase My Down Payment?

Coming up with enough money for a down payment can be difficult for many potential home buyers, so they often settle for simply putting the minimum 5% down.

However, it is better to put down as much as possible towards the purchase price because the more you put down, the less money you have to borrow and as a result your mortgage payments are lower and easier to manage financially.

If you are able to put down 20% of the purchase price, then you are not required to purchase mortgage insurance thus saving yourself more money over the life of your mortgage.

What is an assumable mortgage?

An assumable mortgage is one in which a qualified buyer can take over the mortgage from the current owner on the property being purchased. Assuming a mortgage requires a simple amendment to the mortgage document registered on title. This type of mortgage can offer the qualified buyer with a better than market interest rate in some cases and also cut legal costs associated with obtaining a brand new mortgage.

Beware of Online Applications

When applying for a mortgage online, make sure application form is secure. A secure form encrypts the data you send to the mortgage broker greatly reducing unauthorized access to your personal information. To tell if the web site you are at is secure; look for a little yellow lock on the bottom status bar of your web browser. By double clicking on it, it will bring up additional information about the security of the site.

Also, make sure that the broker you send your information to has privacy policies in place. Some third party companies are just out to collect your information to sell it banks and other brokers.

The website should have visible contact information, such as phone numbers, addresses, and emails. It should be at least affiliated with the BBB and the Canadian Institute of Mortgage Brokers and Lenders (CIMBL). Most importantly, make sure that it is a Canadian website.

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.

Shopping the banks for best rates might damage Your Credit Score!

Did you know that every time a lender checks your credit, it lowers your beacon score? So if you go to four or five banks, you just lowered your beacon score because each bank had to check your credit history.

The difference between having a mortgage broker shop for the best mortgage rates rather than you is that the mortgage broker only checks your credit history once.

Consider using a mortgage broker when shopping for the best deal. It costs nothing and it won't damage your credit score.

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