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Choosing The Right Mortgage For You
This article will help you understand the differences between a variety of mortgage options. There are many different mortgage products offered by the various lending institutions in Canada, so you may not know what features to look for.
As you'll see, each type of mortgage has slightly different features which appeal to a variety of different preferences. For example, some home buyers take comfort in knowing that the amount of their mortgage payments will be the same throughout the entire term of their mortgage. Other home buyers may be willing to accept some fluctuation in the amount of their mortgage payments in exchange for the potential long-term savings or the change to pay off their mortgage faster.
The right mortgage for you in the one that best matches your overall comfort level and fits with your income and lifestyle.
Conventional or High Ratio
A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. The remaining amount required for a purchase (25%) comes from your resources and is referred to as the down payment. If you have to borrow more than 75% of the money you need, you'll be applying for what is called a "High-Ratio Mortgage". Here's how it works:
You must have at least a 5% down payment when you buy a home. Any down payment between 5% and 24% is considered a high-ratio mortgage, and the mortgage must be insured by the Canadian Mortgage and Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company (GEMICO). The insurer will charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 0.5% to 3.75% of the value of your home. This amount can be paid up front or added to the principal amount of your mortgage. A Mortgage Specialist or Mortgage Broker can help you determine the exact amount of the fee.
Fixed Rate or Variable Rate Mortgage
When you take out a fixed-rate mortgage, your interest rate will never change throughout the entire term of your mortgage. As a result, you will always know exactly how much your mortgage payments will be and how much of your mortgage will be paid off at the end of your term.
With a variable rate mortgage, your rate will be set in relation to the lending institution's Mortgage Prime Rate at the beginning of each month. In other words, it will vary from month to month. Historically, variable-rate mortgages have tended to cost less than fixed-rate mortgages when interest rates are fairly stable. When rates change, your payment amount remains the same. However, the amount that is applied toward interest and principal will change depending upon the interest rate that month.
If interest rates drop, more of your mortgage payment is applied to the principal balance owing. The can help pay off your mortgage faster. However, if interest rates rise, more of your monthly payment is taken up by your interest payment.
Short-term or Long-term
The "term" is the length of the current mortgage agreement. A mortgage typically has a term of six months to 5 years. Usually, the shorter the term, the lower the interest rate.
A "short-term" mortgage is usually for two years of less. A "long-term" mortgage is generally for three years or more. Short-term mortgages are appropriate for buyers who believe interest rates will drop at renewal time. Long-term mortgages are suitable when current rates are reasonable and borrowers want the security of budgeting for the future. The key to choosing between short and long term is to feel comfortable with your mortgage payments.
After a term expires, the balance of the principal owing on the mortgage can be repaid, or a new mortgage agreement can be established at the then-current rates.
Open or Closed
Open mortgages can be paid off at any time without penalty and are usually negotiated for very short terms, They are suited to homeowners who are planning to sell in the near future or those who want the flexibility to make large, lump-sum payments before the end of the term.
A closed mortgage has a locked-in interest rate for the full term of the mortgage. Most first-time home buyers prefer a closed mortgage because they want to enjoy the comfort of steady, predictable mortgage payments. If you want to re-negotiate your interest rate, or pay off the balance, you will need to wait until the maturity date or pay a penalty.
About The Author
John Carle & Sharon Gregresh are Realtors with Royal LePage - ArTeam in St. Albert, AB. They pride themselves on providing more than just real estate sales and listings. Their clients benefit from a much larger spectrum or real estate services. Contact them any time at firstname.lastname@example.org or through their website at www.workingtogether.ca. They can be reached by phone at (780) 458-5595
Buying a Home? Dont Get Saddled with Two Mortgage Payments
I have a lot of friends and family who are currently buying houses. Many of them have had a problem with timing. In other words, they buy a house and sign a contract that says that they have to pay the seller in 30 days. (Incidentally, it's never wise to go less than 45 days.) Now, it takes two to three weeks to sell their house, and they sign a 30-45 day contract, so they don't get their money in time to help finance the down payment for the house they are buying. The answer to this problem is simple. Get a bridge loan.
Helpful Mortgage Advice
Mortgage advice overwhelming you? Many people get advice from everyone on the planet when they talk about purchasing a home. People tell them their version of advice on most important factors and expect the potential home buyer to do as they have instructed.
Home Mortgages: Does It Ever Make Sense to Pay Points?
Interest rates on home mortgages are often quoted with and without points. A point equals one percent of the amount you are financing. This means that on a $150,000 mortgage, one point is $1500.00 and two points would be $3,000. These points are in addition to whatever other closing costs you might have.
Is It Time To Buy A House?
At some point as you're writing out your rent check, you get to the point where you look at the amount and think to yourself - at this rate, I could BUY a house. If you're fed up with paying rent every month that's high enough to finance a mortgage, it may be time to take a serious look at what it would take for you to get a mortgage loan and buy a home of your own. How do you know if it's time to stop renting and time to start investing your monthly payment in a house of your own?
Understanding a UK Commercial Mortgage
In many ways a commercial mortgage is just like a residential mortgage in that you pledge real property as collateral against a loan to either buy or refinance that property. You can also receive a commercial re-mortgage and use it as a line of credit for any business purpose.
Kingsland Georgia Mortgage Company Information For Homebuyers Transferring to Kings Bay
If you are transferring to the Kings Bay Georgia Naval Submarine base, more than likely you will need a lender to buy a home.
Be Prepared when Seeking a Mortgage
When you're looking for a mortgage, whether it's a first time loan or you're taking advantage of an opportunity to refinance an existing mortgage, it may seem that you're wading through a quagmire of uncharted territory. If you're prepared ahead of time, you'll avoid some of the common pitfalls and know how to find the best deal for your situation.
Homeowners? insurance: The mortgage connection
A home owners' insurance is the cover for the house against natural calamities as well as liability. This covers the house and its contents but also other personal possessions which the house secures. The natural calamities include fires and winds. It covers thefts and vandalism as well. It is also called hazard insurance (http://www.mortgagefit.com/hazard-insurance.html)
Sound Financial Standing Entails Capital Raising Remortgage
Raising capital is integral for growth and expansion of an individual in more than one way. Every project and venture is meant to contribute in some way to the augmentation of human beings. Our decisions about finances are in one way or the other affect our own personal growth. Raising capital can be an expensive, time consuming, difficult process with an obscure success rate. But with remortgage raising capital is an effortless progression. When you apply for a remortgage, you are basically shifting your present mortgage for improved, more beneficial option. You are moving towards a constructive financial status. Raising capital through remortgage is infact the major endeavour of remortgage. Raising capital through remortgage, this alternative will be encouraging push, if you are still contemplating about remortgage.
Home Loans For People With Bad Credit - When you Should Wait and When You Should Get a Home Loan
Home loans may seem like a bad idea for people with bad credit, but there are times when a home loan can help your credit score and your budget. To know if a home loan is best for you, consider factors such as your current financial situation, current rent payment, and future goals.
Home Equity Lines of Credit Vs. Other Conventional Loans
When it comes to getting money, you have two basic options. If you are a homeowner you can choose to take out a home equity line or credit (HELOC), or you can take out a conventional loan. Both of these products will provide you with the funds needed, but the similarities end there. With varying interest rates and repayment options, you have a wide array of choices. We will discuss the differences between these two options, and then decide on which one is best for the typical homeowner. Remember, that everyone's situation is different, so use your best judgment when choosing a loan product.
Types Of Home Equity Loans
There are two broad types of home equity loans:
Home Equity Loan ? Still a Better Idea Than a 401(K) Loan
Anyone who borrows money is always looking for the cheapest source of funding. That makes sense; no one wants to pay more in interest than is absolutely necessary. And anyone with a sizeable amount of debt, such as credit card debt or a student loan, would be wise to consolidate their debt with a lower interest loan. One source of such a loan is a 401(K) account, which many consumers may have through their employer. Since the interest rate on Federal student loans rose on July 1, many students who missed that deadline may be wondering if consolidating through a 401(K) loan is a good alternative. Is it?
Repayment Remortgages is The Cure For Outdated Endowment Policy
If bulls and the bears of the stock market have no effect on your mortgage plan then you must apply for endowment to repayment remortgage. An endowment mortgage is a financial product offered mainly in the UK. Endowment mortgage comprise of an interest only loan secured on your mortgage and an investment in the stock market. As against an ordinary repayment mortgage, the customer pays only the interest on the capital. The balance goes into the endowment fund. This stock oriented mortgage policy was workable in the context of stock boom of the 1980s and 1990s. At the end of the mortgage term, it seemed plausible that the investment would pay off the capital. But present day market status is unreliable and fails to make endowment mortgage a much sorted out plan. In recent years it is appropriate to revolutionize your endowment mortgage to repayment remortgage.
What is an Offset Mortgage?
An offset mortgage is very similar to a current account mortgage - but instead of having everything all in one account, all accounts are held separately.
How to Buy a Home Without a Down Payment
Mortgage rates are rising and it's becoming more difficult for a prospective buyer to save up for the necessary down payment. Fortunately, there are ways around this hurdle.
What to Really Expect for Closing Costs
Closing on a property is a very challenging time for a would-be homeowner. Being informed, either through your mortgage broker, your real estate agent, or through self knowledge is the best thing you can be when going through this procedure.
How to Get the Best Mortgage
This is a guide on how to get the best mortgage deal. Do not rush into the first offer that is made to you even if you are in a hurry for a mortgage. Take your time, check out what is on offer from local banks, building societies and mortgage brokers. The more time you spend doing this will equate to greater savings on your mortgage. Remember for most people it is something that they will only do once, so do it right!
Understand a Real Estate Appraisal
Happy New Year. Make a difference this year. "Pay it forward" as in the movie. If you haven't seen it, WOW, do.
Buying a Home With Bad Credit - Why a Recent Bankruptcy Will Not Stop You From Getting Approved
Buying a home with bad credit is possible with the help of a subprime lender even if you have a recent bankruptcy or foreclosure. These mortgage lenders specialize in financing home loans for people with poor credit.
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