Whether you’re a first-time homebuyer, a move-up buyer, buying an investment property or if you’re refinancing to consolidate debt, renovate or invest, these are some of the questions to ask your mortgage professional:
1. How much can I afford?
Usually people pick their homes before they organize their financing, but it makes more sense to do it the other way around. Determine what monthly payment you would be comfortable with, how much financing you qualify for and what money you have available for a down payment before delving into your house hunting.
2. What type of mortgage should I consider?
Are you someone who likes a predictable payment or are you comfortable taking some risk to get a lower rate? A fixed interest rate is set when you sign for the mortgage; it won’t change for the entire term. A variable rate, however, will change according to market interest rates, which may cause concern for some. While market fluctuations are hard to predict, we can give you historical data and economic information to help you make this decision. We will also determine your tolerance for risk and advise you on the best option based on your financial situation and needs. Also, the type of mortgage may be determined on the product you qualify for, based on the stress test.
3. How much do I need for a down payment?
Many homebuyers assume they need to make a large down payment in order to get the best mortgage rate, but that’s not always the case. Mortgage insurance products allow buyers to put as little as 5% down and still get a competitive mortgage rate. With the new mortgage stress test qualifying rules, the rates for an insured mortgage may be better than for a conventional mortgage because mortgage default insurance lowers the lender’s risk and cost.
4. What should I take into account for the future?
Everyone is excited about buying a new home, but not everyone is thinking about what that means in the long term. What you can afford today might not be the most practical choice in years to come. What if your job situation changes or interest rates rise or if you’re planning a family? Will you still be able to make payments when you factor in the costs of parental leave and daycare? I will take all these factors into account when negotiating your mortgage rate and options with lenders.