HERE’S SOME IMPORTANT TIPS ON HOW TO DO IT RIGHT!
First: Ensure you’re working with an Accredited Mortgage Professional that understands the business of Mortgages. This is likely the largest financial transaction of your life and it’s too important to put into the hands of someone that cannot advise you properly on the loan process.
There are 4 simple questions I recommend you ask your lender or advisor. If they cannot answer any one of these 4 questions properly, you should reconsider dealing with them.
1) What are Mortgage interest rates based on? Since mortgages are our business, it is critically important to know the answer to this question to ensure you’re dealing with a professional that knows the business and can therefore guide you properly prior to commitment and post funding.
- The correct answer for fixed rate mortgages is Bond Market Yields mainly determine the price of the mortgage.
- For variable rate mortgages the Bank of Canada determines the rate by setting its rate which then determines the Prime rates Banks charge their customers (you).
- 2. What is the next Economic Report or event that could cause interest rates to move? This is important for you to know if you’re in a variable rate mortgage. Any professional mortgage advisor should have this information at their fingertips. With my services you’ll obtain a monthly Economic Forecast that details upcoming events that may impact your mortgage interest rate/or the rate you may consider locking into.
- 3. When the Bank of Canada meets & changes interest rates what impact does this have on my mortgage? If you’re in a variable rate mortgage this is important because the rate the Bank of Canada charges will determine the rate your Bank will charge you. A variable rate mortgage fluctuates with Prime and typically the Prime rate is 1.75% -2% higher than the Bank of Canada rate. This impact is immediate and may impact your next mortgage payment.
- 4. Do you have access to Daily Bond quotes? If a lender or mortgage officer can’t explain Bonds or how the bond quotes determine the rate charged on your mortgage, or the rate you may want to lock into if you’re in a variable, you should be concerned.
Be smart… ask the right questions…. Make sure you get the right answers before signing on the dotted line!!