preparing yourself and your finances before a property purchase,
you can ensure a smooth finance process and can potentially save
thousands on your loan. Start here by learning about numerous mortgage
options available and get familiar with mortgage
your credit history and making sure the information on your profile is
correct should be your next step. Fix any problem you discover. Many
times unknown problems can come to the surface. Some of the problems may
include recorded judgments, alimony payments due, glitches on the
credit report due to any number of reasons both accurately and
Find out how much you can afford and check different lenders.
It's necessary to know exactly which kinds of institutions will lend
money. Banks and trust companies lead the pack, but credit unions and
lenders also offer funds. Fear
not—mortgage basics are fairly simple and there are a host of professionals
more than willing to help, with mortgage
brokers and mortgage specialists
at the top of the list.
Mortgage brokers have access to a
variety of lending sources, including domestic banks and trust
but they can also employ other alternatives such as pension funds, real
estate syndicates and foreign banks.
may also have opportunity to 'assume' an
mortgage held by the seller. Advantages of assuming a mortgage are that
you can speed the buying process due to reduced paperwork and save
in lower legal fees and closing costs. A disadvantage may be that the
lending rate may be less than that of the assumed mortgage.
After learning about different financing strategies involved,
you'll want to at least familiarize yourself with the basic mortgage process.
You'll need to learn basics about the
different kinds of mortgages that are offered on the market today. The most common by far
the 'conventional mortgage.' Lenders will loan you up to 75 per cent of
the appraised value or purchase price of the property (whichever is
and you must come up with the remaining 25 per cent yourself. Many
save specifically for this purpose, but in some cases, alternate or
financing maybe available.
If you don't have the 25 per
down payment, a 'high-ratio' mortgage is one alternative. These are available for up to 95 per cent of the
value or purchase price of the property (whichever is lower) to a
set by government regulation. The proviso is that high-ratio mortgages
must be insured, and the cost, from one to three percent of the
amount, falls to you.
mortgages are usually offered for both conventional and high-ratio
Typically, your monthly payments remain fixed for the term, while the
rate fluctuates with economic conditions. This means that if interest
climb, you'll be paying more per month in interest. If rates drop,
then be paying more off your principal. Conversely, 'fixed rate'
maintain the same rate of interest over the entire negotiated term.
Deciding which type of mortgage is right for you will depend on what you can afford.
privileges are another important part for borrowers to consider. These
allow you to pay money against the principal, reducing the total amount
of interest you'll ultimately pay.
refers to the time period in which the mortgage is assumed to be paid.
A common amortization period is 25 years. This means interest and
payments are set as if you were paying the amount borrowed over a 25
payment schedule. Obviously, the shorter the amortization period, the
interest you will pay.
Don't worry, arranging
mortgage is not that difficult—all it takes is a little reading on your
and the advice of a good mortgage
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