The purchase of a home and along with it the mortgage obligation is usually the single largest debt most people have in their lifetime. When it comes time to remortgage and especially for first time buyers you want to secure the best mortgage rate possible from a mortgage broker in Toronto. Once you’ve calculated how much home you can afford, the following are some things to consider as you shop for a mortgage.
- Should you get a fixed rate or adjustable rate mortgage. Fixed rate mortgages means you pay a consistent rate over the term of the loan, the interest and principal portion are the same throughout the loan term. An adjustable rate mortgage will change depending on an interest rate index chosen by your lender. While this may seem attractive at first remember your rate could go up after the introductory period, so be sure that you are comfortable with an increase.
- Paying for Points. A point is an upfront fee – 1% of the mortgage amount paid to lower the ongoing interest rate by a fixed amount. This is something you only want to consider if you plan to have the loan for the long term
- Closing costs. Lenders charge fees for such things as underwriting, processing charges, title insurance fees, appraisal cost which all make up your closing costs – usually about 3% of the purchase price of your home.
- Do I qualify for any special programs. Some programs might be the following to make home buying less costly:
– VA loans, if you or your spouse are active military or veterans
– FHA allows applicants to purchase with a low down payment are popular with first buyers
-First time homebuyer programs for those first time buyers a good idea to check this out
– USDA loans when purchasing in rural areas the USDA can approve low-to no down payment mortgages and help with closing costs
- How much can and should I put down. A lower down payment will result in having a higher interest rate meaning you’ll pay more over the long term. Putting 20% of the purchase price down is ideal and if you don’t have the cash many lenders will accept down payments as low as 5% of the purchase price. Just be aware that low down payments can require mortgage insurance which again add up over the term of the loan. Put down as much as you comfortably can while keeping a financial cushion in case of unexpected emergencies.
Consider teaming up with mortgage agent Rakhi Madan, she will work to get you the best mortgage rate possible throughout the GTA.