Mortgage vs. HELOC
Making the decision to buy a home is an enormous one. After all, this is likely your largest financial investment, and it is important that you take the time to clearly understand the transaction. The real estate market in Hamilton, Canada is booming. Homes that have stood vacant for years are becoming occupied as an increase in flipping has begun to manifest, making now a better time than ever to invest in a home or rental property. Before you sign any paperwork, however, you should understand a few things about getting the best rate.
Today, there is more competition amongst financial institutions than ever before. Since the advent of the Internet, businesses are able to easily get their messages to large audiences. While this gives you a number of options, it also causes competition that is not always in the best interest of the consumer.
For example, let's say you have called around to various financial institutes, and you finally reach one that offers you a great rate on a five-year loan, and this is by far the most attractive offer. Keep in mind, if it sounds too good to be true, it likely is. Unfortunately, in this particular case, the prepayment privileges could easily make it highly difficult to refinance should you run into hard times later on down the road.
Once you have obtained at least three offers, the best thing to do is seek the professional advice from someone well versed in financing. Just as hiring an attorney to represent you in court can pay back later, the investment knowledge professionals have will benefit you in the years to come. A mortgage is a long-term commitment, and you should not make a hasty decision.
If you haven't checked your credit rating lately, it is a good idea to do so before moving on with your search of a mortgage. If you have late payments and delinquencies, you will end up paying a higher interest rate. There are some ways to improve your score more quickly:
Also consider what type of mortgage is available. A fixed rate mortgage offers the buyer a sense of security, as they know their rate is going to stay the same during the term of the loan. However, before ruling out variable rates, keep in mind that, if you are an investor planning to pay the loan off quickly, taking advantage of low rates now can save you money. However, first-time buyers may prefer to take advantage of current fixed rates, which are currently at historic lows.