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Getting a mortgage can reduce the burden of arranging cash to make payments for a home. A mortgage helps you fund most of your home’s costs by paying the loan in monthly installments. However, choosing the wrong lender can complicate the process and drive up your costs.
Being prepared ahead of time can allow you to ask your potential lender questions that can make the process seamless from your end. Here are some essential questions to keep in mind before picking a lender for your mortgage.
What Will My Payments & Fees Look Like?
As a home buyer, the cost of purchasing a new home is one of the first things you are likely to consider. Having an accurate idea of the expenses can help you narrow down your home search and create a financial plan.
Since mortgage rates fluctuate frequently, it is important to ask your lender what are mortgage rates right now to set a realistic budget for your purchase. When you ask your lender about all the costs associated with purchasing a home, they will review your income, assets, and credit, along with the current mortgage rates, to help give you a definitive estimate.
After your mortgage lender’s review, you can do the calculations yourself with a free online mortgage payment calculator if you still have doubts. You can play around with the calculator by inserting your potential down payment, current interest rate, and other essential elements of a loan to determine what your payments could look like during your mortgage term.
Which Types of Mortgages Do You Offer?
There are a variety of mortgages available on the market, and not all of them might be suitable for you. Choosing the mortgage that best suits your needs and financial status is a crucial aspect of the process.
Not all lenders offer the same mortgages, so you may need to shop around based on your expectations. Research different types of mortgages to better understand which one would be the right fit for you and discuss the details with your lender.
What Documentation Do You Require?
Your lender will ask you to submit several documents to determine your ability to repay the loan. They may ask for things such as your credit score, proof of income, employment letter, and statements of assets and liabilities. Ask your lender what documents they require to determine if you can arrange everything on time for the mortgage closing.
Do I Qualify for Any First-Time Buyer Assistance?
Many Canadians looking to purchase their first home may qualify for assistance from the government and other organizations. The first-time homebuyer incentive helps people across Canada with their first home purchase by offering five or 10 percent of the home’s purchase toward a down payment. There are a few criteria to determine your eligibility for the program, so you can ask your lender to help you figure it out.
Another first-time buyer assistance is a home buyer’s tax credit that allows you to claim up to $5,000 of a qualifying home in the year under certain conditions.
Getting a mortgage is a significant life decision, so you may want to spend a lot of time getting familiar with the process and understanding what your lender can offer. Asking the right questions can help you determine which lender is the best fit for your purchase.
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