Avoid the Worst 7 Mortgage Mistakes!

Avoiding the 7 Worst Mortgage Mistakes

1. Being Unprepared

   Researching mortgages is not the most glamorous activity BUT knowing what you are getting into and what to expect puts you in a perfect position to start your mortgage search. Check out the kinds of mortgages available, rates and costs. Understand the terminology so when you start talking to lenders you know what they are saying. The Canadian Mortgage and Housing Corporation is a good place to start.

2. Not Checking Your Credit Rating

   Go online and get a credit report on yourself. Make sure that it is clean and that there are no mistakes. You are about to ask for a large amount of credit and if you look bad as a potential borrower you will not get a mortgage or you will have to pay premium prices. Some people have very limited credit history and if that's your case you need to establish a credit identity. For this talk to your financial institution they can help you.

3. Waiting till Rates Drop

   Obviously you don't want to buy at the very top of the market. Having said that you can waste a great deal of time and opportunity waiting for rates to drop. Don't forget that a home bought now could be increasing in value faster than the exta interest you might pay. Be sensible, do your research!

4. Not Shopping Around for the Best Rate and Check out your Lender

   No matter how satisfied you are with your current bank you should never assume that they will give you the best rate you can get. Even a half a percent can mean a difference of 25,000 over the 25 years amortization period. (300,000 mortgage at 4.5% and 5%) There are many websites that report Canadian Mortgage rates, The Rate Hub is one.
   By all means talk to your bank, there is sometimes a rate advantage to having all your banking together. Talk to a few others too. Make sure they know you are shopping around, competition helps.
   If you choose a private lender make sure they are reputable. If a deal looks too good to be true, it probably is.

5. Not Getting Prequalified and Not Having a Garanteed rate.

   Once you start looking at homes you have to be ready to place an offer quickly when you find the right home. Others buyers looking at the same properties will be. Sellers don't want to see conditional offers particularly in multiple offers situations. Many an affer has been refused because of financing conditions. Note however that being prequalified does not mean that the lender will give you a mortgage on any property. They have to be comfortable that the home is worth the money and that their loan is secured by the value of the property. Check with your lender what their requirements are.
   Usually a lender will garantee a rate for a certain period of time. Make sure this is written in your prequalifying documentation.

6. Lying to your Lender is a Bad Mistake

   This is fraud, and when they find out they will call the mortgage, charge you, paint your credit rating black and make your life difficult. Don't do it. If they find out before they lend you money, they will not grant you a mortgage and will make note of it.

7. Getting Frightened and Loosing your Nerve

   Buying a home is stressful and frustrating. Its also very exciting and rewarding. Don't loose your courrage, people do this all the time. If you've been careful and done your homework buying a home is often a good investment as well.