Being prepared is a key stress reliever for many different scenarios. And securing a mortgage on a new or existing home is no different. Things can run a whole lot smoother when you know what issues to avoid.
There are many common mortgage mistakes you can sidestep by simply knowing a few important facts, including the following three examples.
Automatically renewing with your existing lender
Even if you’ve been with the same lender for many years, this doesn’t mean they’ll be able to offer you the best choices when it comes time to renew your mortgage. A lot can change over five years – or however long of a mortgage term you selected.
When you’re looking to refinance or renew, it’s important to always have your mortgage agent shop the market for your best available option – not just for your very first mortgage. This ensures you always end up with the best mortgage rate and terms customized to your unique situation.
In many cases, your bank will offer you the posted rate in hopes that you’ll simply sign and return the commitment without shopping around. But this one step of exploring your options can potentially save you thousands of dollars throughout your mortgage term.
Not choosing the best product for your situation
There are numerous mortgage choices available. There are fixed- and variable-rate products, hybrid and no-frills mortgages, lines of credit, term options and amortization choices, to name a few.
And although choice is great, it can be quite overwhelming without expert advice. While one person would benefit from a variable-rate product, their neighbour may be better suited to a fixed-rate product. The key is to always explain your current situation and future goals in detail, so your mortgage agent can select a product that best meets both your current and future needs.
Failing to plan ahead
If you know that you’ll be in the market shortly for a new mortgage, or renewing/refinancing an existing one, it’s essential to plan for it by ensuring your debt management and credit worthiness are in order. If they’re not, start preparing immediately. Don’t make any purchases on your credit cards that you can’t pay off and, if you carry a balance on your credit cards, start paying them down. Pay down as much debt as possible to help with your debt-to-income ratio.
Refrain from making any large purchases before securing your mortgage. If you’re planning to buy a car, for instance, wait until after your mortgage funds, as your debt-to-income ratio will rise, and you don’t want this to prevent you from qualifying for the best mortgage.
Have questions about ensuring you get the best mortgage to match your needs? Answers are just a call or email away!