Common Mistakes People Make When Getting a Mortgage
Getting a mortgage can be a complicated process, and one can end up making many mistakes if one is not aware of the rules and regulations regarding the process. What you don’t know can definitely hurt you. Understanding these mistakes is important if you want to avoid making them. With understanding comes the knowledge necessary to make sure that your mortgage process moves smoothly. This is it is necessary for you to do your research before committing to a particular broker, lender, or mortgage program.
To save yourself money, time, and headaches, Corina Murphy Mortgages - Premiere Mortgage Centre has put together a list of common mistakes people make when getting a mortgage and tips on how to avoid making them.
1. Doing what your parents did
Over the years, mortgages have become more and more complicated and are very different than when your parents obtained their mortgage. Although they have your best interests at heart, a good mortgage broker will ask you a lot of questions to understand what your goals are and where you will be in five years. Your situation may be very different from what theirs were. Traditionally they stayed in their home for approximately ten-plus years. On average, people now move around the four to eight-year mark. A five-year term may not be best for you, and most people ask for the “best” five-year term. There are a variety of mortgage products and rates out there, including what I call no-frill mortgages.
These types of mortgages can be very restrictive and costly should you need to make any changes at all during the five-year period. You need to know what your product allows and doesn’t allow. Saving a little upfront can cost you thousands in the midterm should you ever need to break the contract. Use the guidance of a mortgage broker to understand all the products and rates available and how they will benefit or negatively impact you down the road.
2. Not reading your contract
Again as mentioned in mistake 1, there are many types of mortgages. Your mortgage broker may get you the best rate, but what restrictions are there? You need to read your mortgage contract and understand what you are signing. This contract is in place for the entire term of the mortgage, so you need to know your options if you need to move mid-term, refinance, or sell your property.
3. Not asking enough questions
Your mortgage broker will guide you throughout your mortgage transaction, but you also need to ask questions. Many first-time buyers feel awkward asking some questions, but you have to get over that and ask the necessary questions. If you are not comfortable or are unsure of something during the mortgage process, your mortgage broker will want to know. Purchasing a home is a large endeavor, and it is imperative that you understand the workings of your mortgage. So, ask away!
4. Purchasing a large ticket item after your approval
When lenders look at mortgage applications, the approval is based on your situation at that particular time. If anything material changes with your application between approval and the funding date, it can affect your chances of mortgage funding. Buying a new car with a loan or lease payment can kill your approval. As can buying furniture on a “Don’t pay for a year” plan. Do not make any changes whatsoever, including changing jobs. When in doubt, ask your mortgage broker for guidance.
5. Using a generalist
Buying a home or refinancing a mortgage is a transaction that deals with a large sum of money. You want that money in the hands of an expert. One that deals primarily in Mortgages versus an individual that is also required to be a generalist in savings accounts, credit cards, RRSPs, loans, etc. One small negative on your transaction can make a massive impact on you and your bottom line.
6. Not getting a pre-qualification
This has to be the biggest mistake people make. What you can afford in rent does not translate to how much you would be approved for in a mortgage. There are many variables involved in being approved for a mortgage. Your income, credit history, type of income, do you pass the stress test, etc. Looking at homes before you are properly pre-qualified can prove to be disappointing if you have to lower your budget after looking at higher-priced homes.
7. Thinking you can go firm because you have been pre-approved
Although your mortgage may have been vetted by your bank, mortgage agent or broker, the property that you buy is still the lender’s collateral and must meet the lender’s guidelines. If they do not like the property for some reason or it doesn’t meet their guidelines, they can decline the application. It is imperative that you know the risks.
To avoid these and other mistakes, reach out to the experts at Corina Murphy Mortgages - Premiere Mortgage Centre. I provide my clients with an advantage over their typical bank as I offer a full suite of lending options in this difficult world of mortgages. I provide my services to a variety of clientele, from first time buyers, investors, commercial mortgages, reverse mortgages, private mortgages, debt consolidation, and second homes. My goal is to ensure that all clients are provided with options that are unbiased and tailored to their specific needs, not the needs of the bank. I put a great deal of caring and work into my clients, and I strive to deliver a first-class service to them.
I serve clients across Mississauga, Oakville, Milton, Caledon, Vaughan, Halton Hills, Hamilton, St.Catharines, Streetsville, Meadowvale, Puslinch, Niagara, Brampton, Burlington, Orangeville, Brantford, London, Paris, Shelburne, Newmarket, Aurora, Niagara-on-the-Lake, Welland, Ancaster, Etobicoke, North York, Richmond Hill, Toronto, Muskoka, Huntsville, Bracebridge, Kirkfield and the surrounding areas.