16 Sep Top Mortgage Payment Calculation Tips
Buying a mortgage can be a huge milestone in a person’s life, and because it is such a significant event, it deserves to be given thorough consideration before purchase. However, before you can even get to the point of purchase, you might need some tips to help you calculate your mortgage and understand every step of the process:
Pre-approval; what is it and do I need to secure one?
Pre-approval describes the process that helps to determine how much money you can realistically borrow to buy a new home. When lenders are looking to give you pre-approval, they scrutinize your assets and credit score to make a judgement on what type of loan you might be approved
for, how much you can afford to borrow and what rate of interest might be applicable.
Buyers would be advised to secure a preapproval, but experts say that they should try not to get bogged down in the finer details.
Don’t forget to budget for closing costs:
When trying to calculate how much you can afford in a loan, it can be easy to forget about budgeting for closing costs. However, these can add up, and can give you a nasty surprise when you’re least expecting it if you don’t pay careful consideration to them. In Toronto, for example, the most expensive closing cost for homebuyers is the Ontario Land Transfer Tax.
Bridge loans; what are they and do you need one?
A type of financing arrangement that gives borrowers access to short-term loans for short-term liquidity requirements, bridge loans can help bridge the gap if your purchase and sale dates don’t coincide with each other. You might need one if your property hasn’t yet sold, but you’ve almost sealed the deal on your new home.
Determining your mortgage rate:
One of the quickest and most reliable methods for establishing what your mortgage payments will be based upon varying rates, mortgage amounts and frequency of payments, is to sit down with a mortgage broker, who will help you understand exactly what you’ll be expected to pay, and how often, depending upon your chosen mortgage type.
Understanding the terms and conditions:
Lenders can easily exploit the fact that the majority of borrowers typically begin their mortgage search by studying rates, and rates alone. However, the terms and conditions in your chosen mortgage can have a significant impact upon your overall cost of borrowing, and you’d be advised to study these closely before signing up for anything. If you’re working with a reputable mortgage broker, they will help you understand the terms and conditions and explain them in layman terms so that you’re never confused or left wondering about any of them.
Mortgages may look straightforward at first glance, but peel back the fine print, terms and conditions, and if you’re not careful, you could end up signing up for something that you don’t fully understand and which may end up costing you more money in the long run. Working with a mortgage broker ensures that you’re not left at the mercy of unscrupulous lenders, who may not take the time to explain your mortgage commitments thoroughly to you.