For many people, a mortgage is the biggest debt that is carried in their lifetime. This is because buying a home can be very expensive and not so many people are financially good enough to do so. As such, it is advisable to do some research before taking a mortgage. Learning a few things that help you avoid pitfalls has never been more important. You do not want to pay more than you ought to for a mortgage. Neither do you want to lose your home due to failure to pay on time. Here are lessons that you can learn make from some of the biggest mortgage mistakes.
Adjustable-rate loans do not always work
It is true that fixed-rate loans are no longer the cheapest option. This may tempt you to settle for adjustable-rate loans. However, adjustable-rate loans are usually suitable if you are planning to move out of your home after three years. If you are going to stay in your home for seven years or more, you are better off with a fixed-rate loan. You may wonder why.
First, mortgage rates are usually fair enough. Most people can afford them. A fixed-rate loan keeps you from refinancing. On the flipside, adjustable-rate loans may fluctuate over time causing you to pay more when the rates hit the roof.
Knowing home ownership costs
You should know that the amount of money that you pay to acquire a home is not reflective of its true cost. Start by checking the mortgage amortization schedule. This will give you a clue on the total amount interest and principal you will be required to pay. It can actually be eye-opening to know that borrowing an amount of $200,000 will cost you double the amount when you make the final payment. Therefore, you should make use of the mortgage calculate to estimate payments over the life of your loan. In addition, get information on property tax system from mortgage companies in Montreal to determine when they increase and by what percentage.
You are the decision-maker
The truth of the matter is that a lender is not always a good judge of the house that you can afford. Relying on a bank to set a price range may not turn out to the best thing. Technically, banks qualify you for a loan based on your gross income. They barely take account of other important things such as utilities, insurance, child care among other expenses. Create a budget that allows you to enjoy affordable monthly payments. According to financial experts, you should not spend more than 30% of your gross income on principal, taxes, interest and insurance.
Updating your credit score
It is important to check your credit report regularly. Careful examination of your credit report helps you to avoid mistakes that may jeopardize things. More often than not, these mistakes lead to loan rejection or even higher mortgage rates. Check the credit at least 6 months prior to applying for a mortgage loan. This will give you plenty of time to fix errors.
Something else to note is that it is not always good to act like the deal is sealed before closure. Do not resign from employment. Do not open new credit cards either. With more debt, you cannot borrow more. Lenders want to be sure you can your debt without failure.
One of the most unavoidable things when it comes to buying a home is the application process in mortgage. Though there is an exception to this, especially if you are wealthy and have the capacity of buying your dream home. In addition to this, you can make a full time payment for it. Nevertheless, today there are five common myths or misconceptions about mortgage loans that you should be aware of. This misconception has brought a lot of confusion for many who have planned to own their own home. So, these are some of the myths that you shouldn’t be believing:
The highest credit score will be used by your lender
In this situation, there are two things to consider. The first is, the medium of your three credit scores (from Equifax, TransUnion and Experian) will be used and not the highest. Secondly, you shouldn’t be surprised if your lender uses the lower middle scores among the two when you are buying a home as a co-borrower. For example, you have 720 as the middle, then your co-borrower has a score of 680; in this case, your lender may fix your terms and interest rate on the lower score.
Your quoted rates are the final rates
Unless you have locked your rate, the one you are quoted is just an estimate. You have to look out for your dream home before locking in your rate. This is necessary because rates are constantly changing daily. The rate is connected to the property and the borrower. There is one exception to this and this is when you opt for refinancing. You can lock your rate in the process early by giving your lender sufficient information.
Adjustable-rate loans are less superior when compared to fixed-rate mortgages
Adjustable-rate mortgage (ARM) have stigma attached to them as a result of fluctuation in the interest. Because of safety and stability, many borrowers are given a fixed rate loans. Before making the final decision, you should consider the following questions. What is my plan in staying in this house? Perhaps, your answer is less than five years. Under this situation, an adjustable rate mortgage is better because you have the opportunity of saving more each month. There are a lot of mortgage companies in Montreal that help their clients in choosing which is better.
Real estate agents are impartial in their work with you
Since borrowers are at liberty to choose their preferred lender, lenders can also be recommended by the real estate agents. These real estate agents are more trusted to work and handle various issues that may arise during the process.
No good load without 20% down payment
According to orthodox wisdom, you need to make a down payment of not less than 20 percent to buy a home, but mortgage loans aren’t conventional always. There are a lot of loan options available that may not require a down payment of 20%. Piggyback loan is a sure way in avoiding this issue. A piggyback loan has a first and second mortgage. The first is 80% of the value of the home, which is the 20 % that is paid and the second covers the remaining balance. Before finalizing, ensure you ask your lender of the various options available to you.
It is always wise to have a plan set in place before making a huge lifetime investment. This principle also applies when planning to buy a home through a mortgage. You need to make an extensive research and check out different lenders to get low mortgage rates in Quebec. If you are thinking of buying a home for the first time, here are some of the strategies you can use to qualify for the lowest mortgage rates available in the market.
Form a baseline
Talk to friends or colleagues who have undergone the process of acquiring a home loan to recommend a good lender with a flawless reputation. Make a point to meet with the lender to discuss your credit score and get to know your home loan options. Get all the details you need on repayment plans to ensure you make an informed choice before settling on a particular lender.
Work on your credit score before applying for a home loan
How is your current credit score? Do you have a good or bad credit score? If you are not sure where you stand, check your financial statements to see how your credit score is rated. If you have a good credit score, you stand a better chance of getting low-interest rates on your home loan. If your credit score is far from good, you don’t need to worry if you qualify for a home loan. Most lenders are willing to work with you to come up with ways you can repay your home loan without struggling much. You can increase your credit score by ensuring you pay off your monthly credit card bills and other loans on time.
Decide on your loan term
Don’t shy away from discussing your loan term with your lender. Be honest about your current financial situation so that they can work out the best loan term for you. You need to keep in mind that a longer loan term will attract high-interest rates compared to a shorter loan term. How long you plan to keep your house can also influence the type of home loan you apply for. For example, you can apply for 5/1 hybrid mortgage if you plan to own a house for less than five years. This allows you to pay low-interest rates on your mortgage for the first five years. You can then look for a buyer for your house after the five years and sell off your home.
Check for any hidden charges
Before signing any papers on a home loan contract, check for any hidden charges. This helps you to calculate how much you need to pay on a monthly basis. If you find some terms in the contract are too hard for you to understand, ask the lender to explain them or better yet get a lawyer to simplify them for you. See if you agree with the terms and conditions on a contract before you sign. You should take your time to make a decision and never allow a lender to push you to make the decision if you don’t feel ready to make a commitment.
There are times that we are unable to meet our financial targets and this can cause more problems by not being able to pay debts on time. During this time, one is desperate to seek solutions to debt crisis by seeking debt consolidation. One is usually very vulnerable at this stage and they can easily fall prey to scammers who seek to take advantage of your situation. Consumer credit counseling can help you clear your debts by offering possible solution tactics you can follow. However, you need to ensure that you sign up with the right agency so that you don’t get to become a victim to scammers. These are signs you need to be on the lookout for before signing up with an agency.
The range of financial services offered
Check to see what kind of financial services are offered by the agency. Usually, an agency will offer more than one financial service. They can offer budget counseling for those heading towards debt problems and housing counseling for people facing foreclosure on their homes. These are just a few. These counseling sessions can be one on one or over the phone or even over the internet depending on what works for you. A small maintenance fee is required and you should have your payment records well kept on your side. This applies even to the nonprofit agencies.
Don’t be pressured into signing debt management plans
Be wary of agencies that pressure you to sign up for any sort of debt management plan. It usually takes a credit counselor one hour to evaluate your income, expenses and debt before they can come up with a solution. If a credit counselor is rushing through this process, then they may not be legit. You should never be asked to pay any fee upfront before getting some counseling evaluation on your issue. Note that no agency has the power to erase information on a credit report and the only way to do so is by planning to make payments over time. A good agency will help you plan how to achieve that.
Ability to help resolve debt problems
A genuine debt consolidation agency will have a good reputation of helping its clients get out of debt successfully. You can research first on an agency before signing up by asking for references from family and friends. You can also check the reviews on their website from people who have been there before. To check if the agency has a good standing, check with the Better Business Bureau to check out of any complaints made against them. In this case, it is best to be realistic that there will be always someone who has something to complain about. What is important is to check how the case was handled and how the customer service was.
Is it a non-profit?
Just because a debt consolidation agency advertises that they are a non-profit does not mean that they are legit. You can check an agency out from a third party accredited organization to inquire about the legitimacy of this agency.
Any time you are struggling with finances, life seems not to be moving. This is especially the case if you are thinking of acquiring a mortgage. The truth is that struggles will always be there. But you have a real chance of acquiring one even when there are such struggles in life. You only have to be informed and work over or around them, to give yourself a better chance as you present your papers for a mortgage application.
Whether you have a bad credit score or a lower income, financial institutes always try to come up with a way to make things work for the maximum number of people. Let’s look at some of the ways to combat issues that may hinder mortgage acquisition:
When your credit score is poor
The detailed report about your financial past, how well or poorly you have managed your credit card and how well you are at paying back debt gives financiers a pretty good idea about where you stand with loan applications. Coupled with many other factors, they can easily make a good judgment on how well you are equipped at paying back, if a mortgage comes your way.
With a poor score, they are at risk. But you really want that house, right? If so, you will first need to step back and start improving your credit scores. Many resources are available at how to do this, but at the end of the day, it is your money spending that needs to be worked on. Get the right advice and start working on the money management as soon as yesterday.
When you have a lower income
For lenders, the affordability of the payment to your mortgage is very important. They will not lend unless you have the muscle to repay. So what is the fate for people lower income? It is important for both you and the lender to examine and judge what the total income you have is, considering your bills and cost of living. Afterwards, you can easily check the affordability of a mortgage to a certain house. If it stretches you too thin, you can do a bit more research about more options of less expensive houses.
When you have a small deposit
Smaller deposits for mortgage acquisition are not a very good start. It should be noted that you need to have at least 5% of the house’s cost as a deposit to have a good chance of paying lower interests to the house. That said, it is prudent to start saving your money early. You can also reach out to institutes that give you some help in doing the deposit, so that you can eventually have the upper hand with the house.
These are one of the hardest groups of people to award a mortgage to for financiers. For you to be given one, you must prove that you are stable in your business. This means that you must present your tax returns to the institute over the last 3 years, offer chartered accounts and give detailed projections about your business. This does not mean that it is impossible to get a mortgage, though you will need the help of a mortgage dealer to work you through such details, so why not get one?
Buying a house can really get you so excited and when you are jumping with much anticipation, you become so engrossed at the beautiful houses that you see without actually looking back at the expenses that will come with the purchase. Sometimes, since you are so in love with a certain property that you have come across with during your search, you will tell yourself “I am ready to get the mortgage needed to buy this.”
Are you really ready for that type of investment? What if it costs you more than you can afford? Well, your lender will definitely jump for joy with this scenario. This will definitely mean more money for them. Besides this obvious answer, there are different reasons behind why you should buy a house that costs less than you can afford.
Buying less than you can afford will benefit you more in the future
Gone were the days when you can be made to believe that the more expensive home will mean more value for you in the future. This may be true in the past considering that land was once a very limited commodity. The belief that housing prices will always appreciate in the future is just part of theory. The truth is you might end up losing more if you pay more especially if you do not plan of staying in that home for a long time, say in the next 10 years or so.
It can save you in all other expenses once you move in
Many times, the price speaks for the size of the home you are going to purchase. The more expensive the home is the bigger or more spacious it will be. It can also mean more modern amenities inside the property as the case may be. With these conveniences added to the cost that you are going to pay for, expect more expenses to come in as well. Everything will be higher starting from insurance premiums and property taxes to utility bills. It can even mean more cost on repair, upgrade and replacement.
It can mean better savings for your children’s future
When buying a home for your family, it follows that you will consider the needs of your kids. Many times, you presume your children need more space where they can move around and play whenever they want to. Remember though that this is just the short-term part of the picture. You have to think long-term when the best interest of your child is at stake. Therefore, if you buy a larger home with a more expensive price tag to it, you will end up paying more on your mortgage rather than saving more for your child’s future.
Getting the home that you are in love with can mean more expenses on your part. You then have to weigh in and make sure you only get the property that costs less than what you can afford. In doing so, it will be good to take a closer look at your mortgage opportunities through the help of a broker who can help do the math for you.
Buying a home and securing a mortgage is a major financial commitment. This is why you need to make an informed choice before settling on a mortgage rate from a certain company. For a first time home owner, this process may seem overwhelming but with the right research, you will be well equipped with the information you need to help you make a decision. We are going to look at some ideas that will help you get low mortgage rates.
There are two types of mortgages available in the market. Fixed rate mortgages and adjustable rate mortgages are given depending on the requirements of the client; however, many home-owners go for the fixed one. As a soon-to-be homeowner though, you need to understand what each type offers.
A fixed rate mortgage is one that offers a fixed rate of interest that you will be paying throughout your repayment period. The benefit of this type of mortgage is that you can easily plan on how you will pay at the end each month. The rates are not affected by the economic status. However on the downside, if there are favourable economic conditions, you will not get any financial relief. Knowing this you will decide which type of will work the best for you.
Every approved loan needs an initial down payment. Mortgage brokers advise their clients to save first before buying a new home. You need to understand that when you make a huge deposit on your down payment you get low interest rates but if you pay less you get high interest rates.
Usually, at the final process of paying off a mortgage, there are costs that one needs to pay off. They roughly add up to around 3% of the actual property value. The lenders charge this amount to constitute costs to cover things such as the processing fee, underwriting title insurance costs and appraisal costs. As you look around check on mortgage lenders that offer the best deal on closing costs.
Compare mortgage deals from various lenders before making a decision. However one is advised to seek the services of a mortgage broker since they will save you the time that you will use going round checking on mortgage terms. They are well experienced and since they liaise between you and the lending institutions .They already have the information that you need. They advise you on where best to invest in.
There are implications that come with getting into signing off on a mortgage if one is not fully ready to make the investments. Checking your credit score ensures that you get your financial position and if you have a low credit score, it advisable to first work on improving the score before applying for a mortgage. However even with a bad credit score you can still apply for a mortgage and your mortgage broker can help you with this. If you decide to take on the mortgage you can later decide to refinance your home and increase your credit limit which allows you to pay in smaller instalments.
Gone are the days when you have to allocate a very huge amount of cash in order to purchase the property you have always wanted. Now, in the Canadian mortgage scene, you can potentially buy the property within a certain percentage of down payment, which is often five percent. When this is the case, however, you will be required to have mortgage default insurance which then brings you back to just settling for more than the 20% down payment for the property.
This is called the conventional mortgage or one where you are expected to pay at least 20% of the property’s value as down payment with the remaining 80% or less financed through a lender. This will then be the Loan to Value ratio of your property. Always remember that the higher the contribution you make, the lesser the mortgage loan amount you will pay over time. Whichever the case, whether you choose a 5% or more than 20% down payment, you might as well consider learning how to save for that amount.
Save your funds in an account
Saving for the down payment is perhaps the most practical way with which you can get that dream home of yours. It will take time to save this amount if you do not learn how to choose the right account with which you should save those funds. It is recommended that you have an account that guarantees you will gain interest on your savings. Mutual funds, term investments or a Canadian Tax-Free Savings account can be a good start. You may also want to invest with a Registered Retirement Savings Plan (RRSP).
If you are lucky enough, you can also use the cash gifts given by your friends and loved ones. You can save the same in any of the funds mentioned above so that when the time comes and you are ready to make an investment, there is something you can use to finance your down payment.
Secure mortgage default insurance
If in case you have not saved the 20% down payment but you have at least 5% savings to finance the down payment for your dream home then you are good to go provided you have secured mortgage default insurance. You can look for the best suppliers of such insurance in Canada. This insurance is a licence for you to obtain the nod of the lender since there is something he can ran after in case you default on your payment. Do not mistake this with the regular homeowner insurance that protect homeowners from property damages.
Pay the insurance accordingly
You have choices when it comes to paying the mortgage default insurance. First, you can pay it on a lump sum basis right at that instant when you have closed the mortgage deal with the lender. If you do not have enough money to pay it lump sum, however, you can go for option number 2, that is, to pay the insurance over time in addition to your monthly mortgage amortisation.
It will be wise to compare mortgage rates to save you more in terms of your total investment later on. Feel free to compare rates via this website!
One of the most common challenges people with bad credits face is getting a good mortgage. Luckily, there are bad credit mortgages that cater specifically to such individuals. People make financial mistakes sometimes. However, it does not mark the end of your dream to own a house. There are useful ideas that make things work even with bad credit. Hard financial times and mistakes put you on the right footing when you learn from them. To make a bad credit mortgage work for you, you need to consider the following ideas.
Type of lenders
Many lenders will probably turn you down when you approach them for a loan with a bad credit score. By searching around carefully, you can still find lenders who can assist you in your current financial situation. It is possible to get a mortgage with a bad credit. Bad credit mortgage lenders make it possible. However, you need to be careful when selecting a lender. There are lenders who may take advantage of your situation. Ensure you find reputable bad credit mortgage lenders before taking further action.
Work on short-term basis
For a fact, it is costly to get a mortgage with a bad credit. If you decide to get the mortgage loan, you need to consider making it a short-term commitment. It pays in the long run when you choose to make short-term commitment. Managing the mortgage payments over a short-term period makes it possible for you to be eligible for conventional loan programs that have low interest rates. Note that this does not imply getting a short-term loan as an alternative. It simply means ensuring you pay the mortgage on time. This is inclusive of all your debts and bills. Over time, your credit score will improve and earn you a chance for better conventional loans.
The interest rate for a fixed-rate mortgage may be too high for you during tough financial times. Therefore, you can consider an adjustable-rate mortgage as it guarantees you the possibilities of getting low rates. It helps keep the mortgage payment low and realistically manageable in your current financial situation. Consult mortgage experts for more clarity on how to make good use of an adjustable-rate mortgage.
Different types of lenders have varying terms and conditions. For instance, there are mortgage lenders who have a prepayment penalty option. These lenders often convince borrowers to take the option. In a mortgage contract, this clause essentially gives the lender the liberty to collect additional money when you make early payment or additional payments beyond a given limit with a view of reducing the debt. Over time, it can be very costly. You can make extra payments if you are in a good financial position as it will help reduce your debt. For the clause, do not consent to the idea.
Working with a reputable mortgage broker is highly recommendable especially when you are in a tight financial spot and you need to make critical choices. A broker will help you to make use of all these ideas in the most effective way.
One of the first steps of becoming a savvy investor in Canada’s real estate scene is to be familiar with the average rental prices in Vancouver, Montreal and Toronto. This invaluable knowledge will also prevent you from making any regrettable decisions.
Rental prices in Montreal
Montreal is popularly known as a city of renters because it has a great reputation for being a town with good bang for your rental buck. In fact, it has the largest rental market in Canada with rental housing options such as duplexes, triplexes and apartments. Montreal offers a broad range of old and new dwellings that offer a variety of architecture and styles to suit many tastes.
When it comes to rental apartments in and around Montreal, the average rental price is over $1,100. In addition, one-bedroom apartments can be rented for approximately $970 and two-bedroom apartments can be rented for approximately $1,180 per month on average. Over the years, studies have shown that the average rental rates for one-bedroom apartments have decreased by 0.5% and two-bedroom apartments have decreased by 3.1%.
Rental prices in Vancouver
Vancouver has the highest rental rate throughout Canada and it is approximately $1,280 per month on average, and that’s why Vancouver’s tenants are starting to feel the squeeze as rentals prices keep increasing. In addition, nearly half of Vancouver’s population rents. These tenants prefer to live older apartment buildings that are located along Main Street and other arterial roads.
Still, there are other tenants who rent bigger houses that are “carved” up into luxurious suites. One of the reasons why Vancouver’s rental apartments can fetch up such a high price is because investors tear these units down then builds them anew. Once these units receive a facelift, their owners can then easily double the price of the rental fees.
Rental prices in Toronto
Just like Vancouver, Toronto also tops the list when it comes to high rental prices. The price of a rental two-bedroom unit is more than $1,260 per month on average. Just west of Toronto, there are units in Burlington that go up to $1,550. What’s more, Burlington is just one part of the Greater Toronto Area and already has a population of over 175,000. In addition, an increasing number of new housing developments are springing up and rental properties are becoming more popular with people who work in Toronto while wanting to stay away from the hustle of a big city.
Interested in buying a second home in one of these cities to rent out?
You should first know that you are going to be a landlord, and that’s why learning how to manage the property and your tenants come with great pertinence. There are a lot of ways to invest in a rental property, and it starts with choosing an apartment that’s located near your child’s college or a unit in an existing multifamily condominium. The next thing to keep in mind is not to neglect to run the numbers. From online mortgage calculators to a mortgage broker, there are many avenues that allow you to get help to calculate down payments, insurance, taxes, and more.