10 questions to ask before choosing a mortgage
The homebuying process is full of question-asking, as you will want to interview for the right professionals to work with, such as your REALTOR® and mortgage broker.
When it comes to choosing your mortgage, you should be asking some questions as well, like these 10:
- What is the interest rate? Your lender will offer you an interest rate based on the loan and your credit. The interest rate, along with the mortgage balance and loan term, will determine what you pay each month.
- What is the monthly payment? You will need to understand what your monthly payment is in order to create an accurate budget, and really determine what you can actually afford.
- Is it a variable or fixed rate? Fixed rates are based on movement in the bond market (the benchmark for a 30-year fixed rate mortgage is the yield of a 10-year bond). Variable rates, on the other hand, are priced in accordance with changes to money market conditions. That means if the prime rate goes up, variable rates will go up.
- What are the closing fees? Again, to understand your budget, you need to determine all of your closing fees before you decide on anything.
- Is there a penalty to prepay? if you plan to make some extra mortgage payments to pay off your mortgage principal early, you may have to pay a fee. Don’t forget to ask this.
- What are the qualification guidelines? Not all lenders are created equal, and same with loan amounts. Find out what is needed to qualify for the loan.
- Do you have to pay for mortgage insurance? If you plan to put down less than 20 per cent downpayment, you are required to pay mortgage insurance. Find out what this will look like and cost.
- Are there other products you qualify for? There are certain programs that you may be eligible for such as homebuyer credits or rebate programs. Always ask your mortgage broker about this.
Do you have questions about the current mortgage market? Be sure to contact me.
