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Selecting a mortgage rate and product that’s right for you is harder than it looks. It involves a lot of research based on your current finances, credit situation and short- and long-term goals, to name just a few important elements. That’s why working with a mortgage agent is always your best choice when you’re in the market for a mortgage.


Your first step is to get preapproved for a mortgage. Your mortgage agent will compare offerings from multiple lenders and decide which is best for you before getting you preapproved.


In today’s competitive housing market – which often includes multiple offers and bidding wars – you’ll want to ensure that you’re a strong contender, and being preapproved will help. 


A preapproval offers you the peace of mind in knowing the amount you can borrow and the price you can afford so you can concentrate your search on homes in your price range. A preapproval also streamlines the final approval process as it represents a conditional commitment by your lender to grant you the mortgage you need. 


Considerations to keep in mind

When it comes to finding your best mortgage options, one important choice involves determining whether a fixed or variable mortgage makes sense. 


Having a fixed rate means that your rate will remain the same over the term of your mortgage, while a variable rate fluctuates with the lender’s prime rate throughout your mortgage term. So, while your variable-mortgage payment will remain the same throughout your term, your interest rate may change based on market conditions. 


When selecting a term length (five years is the most popular), you have to weigh a few factors, including how long rates are going to stay low or high and the duration of time you plan to remain in your home. This is where your mortgage agent’s expertise is even more invaluable as breaking your mortgage early can lead to some hefty early payout penalties. 


You’ll also have to decide if you want an open or closed mortgage and special features such as prepayment privileges.


With an open mortgage, you’re able to prepay any amount of your mortgage at any time without facing a prepayment penalty. The compromise for having an open mortgage is that interest rates are higher to make up for the flexibility of being able to pay it off at any time. 


With a closed mortgage, on the other hand, the interest rate is more attractive than an open mortgage because you’re limited by how much extra you can pay towards your mortgage each year. So, the compromise here is that you’ll face a prepayment limit. 


Prepayment privilege is a great option to have because every dollar you pay towards the principal balance of your mortgage reduces the overall interest you’ll pay. This can shave a lot of time off the number of years it’ll take you to become mortgage-free.


Have questions about selecting the mortgage that best suits your needs? Answers are a call or email away!