Buying your first home is a proud moment! Who doesn’t want to own their own home? The problem is that a mortgage can be the most expensive bill you’ll ever have to face, but if you plan ahead you’ll be able to avoid a lot of the pitfalls that come with home mortgages. Here we’re going to go over everything you need to know and about getting the right mortgage and how to avoid the wrong one.
What’s the Difference Between Pre-Qualified and Pre-approved for Mortgages?
Pre-qualified and pre-approved are two of the most important terms you’ll hear when dealing with home mortgages. Being pre-qualified means that you can get a rate over the phone and can walk into the bank and get a rate… just like everyone else who is applying for financing. Being pre-approved means getting a good faith estimate of how much you would pay every month, how much financing you can qualify for and other important things you need to know when dealing with mortgages. No matter what lenders tell you, being pre-approved doesn’t mean you have to do business with them.
Don’t Settle on the First Lender You Talk To
If one lender gives you a good deal, there will always be another who will give you a better deal. This is why it’s important to comparison shop before choosing the lender to finance your home mortgage. With a Toronto mortgage broker you’ll get an experienced and friendly local expert to help you get a better deal. It’s important that you compare not just loan amounts but interest rates, monthly payment estimates and terms as well. While one lender may give you fantastic interest rates, they may turn around and hit you with penalties that triple the interest rate in six months because you pay your payment early.
The most important reason you shouldn’t try to comparison shop on your own is this: when lenders check your credit report they bring down your credit score. But if you can apply to many different lenders within two weeks of the first checking your credit report, you’ll be able to avoid excessive damage to your credit as well as find the right lender for your needs. Why should you hope and pray that a lender will give you financing when banks are eager to get your business?
The Difference Between Conventional and Private Home Mortgages
A conventional mortgage is financing granted by a traditional lender like a bank; these can be troublesome for people who have gaps or issues with their credit history. Private home mortgages on the other hand don’t really use credit to factor in what kind of mortgage people can get, but favour things like equity and collateral more. Each will have its plusses and minuses so you’ll want to speak with one of our Toronto mortgage brokers to make sure you get the right solution for your needs and situation. Why take what you can get when you can make lenders compete?
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