Step One:
- choose the type of mortgage best for you. Each type of mortgage has slightly different features which appeal to people with different preferences. For example, some people take comfort in knowing their interest rate will be the same throughout the entire term of their mortgage. They can take comfort in knowing what their payments will be for the term of the mortgage. Other people may be willing to accept some fluctuation in interest rates in exchange for the potential for long term savings or the opportunity to pay off their mortgage faster.
- The right mortgage for you is the one that best matches your overall comfort level and fits with your income and lifestyle.
Step Two:
- deciding on a fixed interest with either short term or long term. A mortgage typically has a term from 6 months to 25 years. Usually the shorter the term the lower the interest rate. A short term mortgage is usually for two years or less. A long term mortgage is generally for three years or more. Short term mortgages are appropriate for people who believe interest rates will drop at renewal time. Long term mortgages are suitable when current rates are relatively low or borrowers want the security of budgeting for the future.
Step Three:
- Deciding on fixed rate mortgage or variable rate mortgage. When you take out a fixed rate mortgage, your interest rate will never change throughout the entire term of your mortgage. With a variable rate mortgage, your interest rate may vary from month to month. This will affect the amount applied towards the principle & interest. If the interest rates move up less of your payment will be applied to the principle of the payment. If interest rates drop more of your payment will be applied towards the principle. In a low interest rate time this can help pay off your mortgage faster.
Step Four:
- deciding on a open or closed term. Open mortgages can be paid off at any time without penalty. They are suited to homeowners who are planning to sell in the near future or those who want the flexibility to make large lump sum payments prior to maturity. Closed term mortgages are commitments for a specific term. If you want to pay off the mortgage balance you will have to wait until the maturity date of the mortgage or pay a penalty. This penalty is waived or partially avoided if upon a sale you use the portability feature of the mortgage. During the fixed term, lender allow for prepayments without penalty. This amount is usually a percentage of the original amount of the mortgage.
Step Five:
- once you have chosen the type of mortgage suited to you, the next decision is to decide on your repayment plan. Your options are as follows:
- Monthly payments
- Accelerated bi-weekly payments
- Accelerated weekly payments
- Semi-monthly payments.
- Non-accelerated bi-weekly payments
- Non-accelerated weekly payments
Step Six:
- Closing the deal. The following is a list of information we will need to obtain from you to complete the documentation for the mortgage approval:
- confirmation of income or employment earnings. Please contact us for the documentation required as it varies for clients who are employed versus self-employed clients.
- confirmation of your down payment funds.
- address & contact information for your lawyer or notary
- copy of the purchase agreement, MLS printout & property disclosure statement
- survey certificate or title insurance for the property
- gift letter if down payment funds are a gift from family.
|
|
