Buying a house is one of the most expensive purchases, so choosing the right mortgage is very, very crucial. You shouldn’t rush to move into your new home because you’ll neglect to shop around for the right mortgage.
As a result, this could lead into a financial mistake that can cost you thousands of dollars. Therefore, you should take the time to shop around and carefully choose the right mortgage for you and your family.
To avoid ending up with the wrong loan and prevent financial problems, here are the 4 things to consider before choosing a mortgage:
1. Consider the interest rate and annual percentage rate
You should consider the interest rate and annual percentage rate before choosing a mortgage. The interest rate is the total sum of money borrow and calculates how much your monthly payments will be. The annual percentage rate includes the interest rate along with other costs such as broker fees and some closing costs and calculates the total cost of the loan.
2. Consider the down payment requirements between lenders
You should consider the down payment requirements between lenders before choosing a mortgage. Many lenders offer insured mortgages with as little as 5% down payment. However, this low down payment comes at a price. In Canada, mortgage default insurance is requirement for down payments between 5% and 19.99%.
3. Consider all closing costs
You should consider all closing costs before choosing a mortgage. Closing costs are one-time fees lenders charge for a number of different administrative expenses. In addition, closing costs represent approximately 3% to 4$ of the total sale price of your home.
4. Consider acquiring a good faith estimate
You should consider acquiring a good faith estimate before choosing a mortgage. A good faith estimate is a document provided by lenders to home buyers upon completion of a mortgage loan application. This document is a breakdown of all potential costs and other costs associated with a mortgage loan.