1. Steer clear of high-cost, high-fee loans
Avoid loans that roll a balloon payment, prepayment penalty, mortgage life insurance or other provisions into one loan. These loans often make the combined financial burden too much to bear for average borrowers.
2. Adjustable-rate mortgages
Adjustable-rate mortgages (ARMs) are favourable when rates are going down or your salary is going up. Otherwise, each rate adjustment can sting. ARM holders can reduce the impact of worst-case rate hikes by saving money during the initial low-payment period, buying down loan balances and budgeting.
3. Clean up your credit before shopping for a home
Cleaning up your credit report before you're in the mortgage process can result in better loan rates and terms. General guidelines for strengthening your report include: paying bills on time, limiting outstanding credit, closing out unused credit cards, resolving outstanding bills and correcting inaccurate information.
4. Watch out for inflated appraisals
When you're buying a home, a property appraisal should determine the mortgage's current market value. This is done by comparing the home against other similar homes that have sold recently. Make sure and do your homework to ensure the house you’re buying is worth the price you’re paying; otherwise you could end up with a home that’s worth less than you owe.
5. Don't apply for too many loans
Each time you apply, lenders request a copy of your credit report. Frequent inquiries can be a sign of “credit seeking behaviour” and can adversely affect your credit rating. Here at Greenwood, we pull your credit only once and use that one credit bureau with multiple lenders.
Happy house hunting,
David Shieh
Posted by David Shieh- Abbotsford Real Estate Agent
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