2 Sep

5 Common Mortgage Mistakes

General

Posted by: Angela Calla

Like many aspects of your   life, obtaining financing on a new or existing home can be a lot less stressful and a   whole lot more straight-forward if you’re prepared. But if you’re not   prepared, there are many common mistakes you can make. Most of these mistakes   are easily avoidable with some preparation and informed advice – feel free to   call or email with any questions/concerns! 

Below are the Top 5 Mortgage Mistakes people make when trying   to secure financing for their home:

  1.   Failing to choose   the best product for their situation
  2.   Automatically   renewing their current mortgage with their existing lender
  3.   Signing documents   without reading them
  4.   Taking it to the   limit – running up credit
  5.   Not planning for   your mortgage application

1. Failing to choose the best   product for your situation
  There are many different types of loans out there. There are fixed- and   variable-rate products, hybrid and no-frills mortgages, lines of credit, term   options, amortization choices, and more.

And although choice is great, it can be quite overwhelming   without expert advice. While one person would benefit from a variable-rate   product, their neighbour may be better suited to a fixed-rate product. The   key is to always explain your current situation and future goals in detail so   we can select a product that best meets both your current and longer-term   needs.

2. Automatically renewing   with your existing lender
  Although you may feel an allegiance with the current financial institution   that holds your loan, they may not be able to offer you the best choices.   When refinancing or renewing, it’s important to always shop the market for   your best available option, much like you did when

 

securing your first mortgage. This ensures you end up with the   best mortgage rate and terms customized to your unique situation. In many   cases your bank will offer you the posted rate in hopes that you’ll simply   sign and return the commitment without shopping around. Make sure you do your   due diligence when refinancing and renewing. After all, this is your   home, your mortgage and your money!

3. Signing documents without   reading them
  Never sign documents without reading them. If you’re unsure about   something, always ask for clarification. Remember that you’re the one entering   into the agreement, so you need to understand and agree with that commitment.

4. Taking your credit to the   limit
  Make sure that your credit balances are in your favour when it comes to your   mortgage application. Lenders are looking for an appropriate debt-to-income   ratio. In other words, you need to have more income than you have debt. Avoid   running up a balance on your credit cards and pay down existing debts as much   as possible.

5. Failing to plan ahead
  If you know that you’ll need to obtain, renew or refinance a mortgage, it’s   essential to plan for it by ensuring your credit is in order. If it’s not,   start preparing. Don’t make any purchases on your credit cards that you   can’t pay off and if you carry a balance on your credit cards, start paying them   down. Refrain from making any large purchases before securing your mortgage.   If you’re planning to buy a car, wait until after you have secured financing,   as your debt-to-income ratio will rise and you don’t want this to occur while   trying to secure a mortgage.

Understanding how the mortgage process works and how lenders   qualify your loan will help you avoid the above mistakes. As always, if you   have any questions or concerns, clarification is just a phone call or email   away!

Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca