Five-year fixed mortgage rates are beginning to climb. If you want to take advantage of low rates you should act now, before rate rise further.
Tips to get a great rate:
Major banks have raised rates on at least some of their mortgage products as growing optimism over the economy has sent the yield on the Canada five-year bond soaring.
Borrowers who do not act quickly could lose out on mortgage rates that are still very low.
These rates could save buyers thousands of dollars over a fixed five-year term or help save on interest on a refinance and reduce their monthly payments.
A good idea before you start the mortgage application process is to make sure you have minimal debt, good credit, proof of adequate work income and the ability to produce a down payment.
Lenders will look at things like:
- You don’t have too much debt
- You are managing your debt
- You know how to use credit responsibly
- You have a credit score of at least 660
- If your score is below 560 you may struggle to get a decent interest rate
- If your score is low, you can improve it by reducing credit balances
- You are employed full time
- If you are contracted or self-employed lenders want to see two years of your income
You can usually qualify for a mortgage worth five times your gross (pre-tax) income if you can produce a down payment and you do not have large debt (Jason Zuckerman – Montreal real estate mortgage broker).
Working with a Mortgage Broker helps eliminate this step. Working with Client First Mortgage Solutions will get you a lender that best fits your needs, as well as industry-leading low interest rates.
We have relationships with a diverse group of leading lenders in the Canada mortgage industry. Our lender relationships increase the level of competition for your mortgage, resulting in better rates and terms for you, the home buyer.
Remember the bank employees work for the bank, while we work for you.
A pre-approval is a formal letter from a lender that lays out how much money you can borrow and at what interest rate.
“In a very competitive real estate market where you and potentially 10 other people are looking at putting an offer on the same property, that seller is more inclined to go with a buyer who can show proof that they’re pre-approved,” (Reza Sabour – Canadian Mortgage Brokers Association of B.C.).
Avoid big life changes after pre-approval
Once you are pre-approved don’t make any new large financial commitments prior to buying a home or refinancing an existing mortgage.
Have your closing costs ready
Closing costs are fees you will pay to finalize your loan.
Typical closing costs include home inspection fees, various taxes, title insurance, legal costs and reimbursements of any utility charges the seller has prepaid.
Closing costs generally come in 2 per cent to 5 per cent of your loan amount.
You will need to budget and make sure you can come up with that kind of money, because the fees must be paid upfront on closing day.
Original Article – Money Wise