Mortgage 101: Rate isn’t everything!

The interest rate you receive on your mortgage is very important, but it sure isn’t everything. Here’s everything else you should be considering when choosing the right mortgage for you!

1. Prepayment options

It’s everyone’s dream to pay off their home. Ensure the mortgage you are getting provides you with best options available. Non-Bank Mortgage companies often have better prepayment privileges than the big banks.

1. Early payout penalties

The big banks use a complicated and convoluted formula to calculate your early payout penalty. A mortgage broker can find you an alternative lender with a much more transparent, and typically much smaller, penalty. Even if you don’t think you’ll be moving out of your home before your term is up, special circumstances arise all the time that leave home owners on the hook for thousands of dollars in penalties.

1. Down payment options

Do you have a full 20% down payment saved to buy that home you’ve got your eye on? Even if your answer is no, you may be able to move in quicker than you think! Several lenders are able to qualify you with as little as 5% down. Not to mention that there are financing options for borrowing your entire down payment if your creditworthiness and affordability qualifies.

1. Fees

There is a prevalent myth that mortgage agents & brokers charge large fees for their services. If you are a qualified borrower, meaning you qualify for a typical bank mortgage, broker services are free to you. Think of a mortgage broker like your Insurance Agent. Their role is to shop around for your best mortgage options. They are generally paid by the mortgage company.

1. Special options

In addition to all the above factors, you should also be considering the special options that some lenders can offer you. Are you self-employed, looking to complete major renovations or lacking in the down payment department? You may qualify for, or benefit from, an unconventional mortgage. For example, when buying or even refinancing, some lenders allow you to add the cost of renovations to your mortgage, freeing up your cash!

Different lenders have different options to suit your individual needs. Don’t be lured in simply by the lowest rates. Make sure you get the full story on your mortgage and not just the Coles notes.