Mortgage vs. HELOC
The decision to purchase a home in Oakville, Canada is one of the largest you will make in your life. The current average sale price in the area is $739,429, so it is important that you do your homework before signing onto a mortgage. There are some tips to follow to ensure the rate you sign up for is the best you can do when it comes to getting a new mortgage in Ontario.
Buying a home is not something you wake up one day and do. It takes preparation, and the best way to ensure a low rate is to come prepared with a large down payment. It used to take 20 percent down to acquire a mortgage, but banks today are issuing home loans for as little as five percent. Since these loans take longer to pay off, they accumulate interest for that longer time period. Furthermore, financial institutions tend to look at a customer with a larger down payment as one with financial strength, and this can result in lower rate availability.
Before making that final decision on the best lender, make sure you get all the information you will need upfront. For example, if dealing with a broker, inquire about their fees. Furthermore, find out if a credit check will run while you shop around. Multiple hits can decrease your credit score and ultimately result in a higher interest rate once you find the lender you want to work with.
While finding a low interest rate is important, there are other considerations that must be made. Understanding some basic terminology will help you make a more educated decision. For example, signing up for the lowest interest rate available may not be a good idea if the rate is variable and you are not financially prepared for a rate increase. A slightly higher, locked in rate might be a better option if you don't plan on paying off the note in a short period of time.
You also must consider whether the financing option is open or closed. Closed term loans tend to feature lower interest rates, but there are some downfalls. For example, you may not be able to prepay on your mortgage during the length of the loan. Going with a loan with a slightly higher interest rate that is open term and fixed is sometimes a safer choice.
Taking the time to get a mortgage pre-approval is beneficial. This allows you to find out the maximum amount of money you qualify for, and the rate is held for 120 days. This allows you four months to find the home you want knowing you have the financial availability.
Once you have taken the time to understand what you are looking for in a mortgage rate, it is important to shop around and get as many offers as possible. Competition is everywhere, and financial firms and banks will often make special offers to gain your business. When you are armed with better offers, you have the power of negotiation on your side as you seek the best mortgage rate.