HOW TO BUY A HOUSE: vol. 2
FIRST: Make sure that you are working with an experienced, professional loan officer. Someone who is not advising you properly and troubleshooting issues that may arise along the way is not acting in your best interest. BUT, how do you know? Here are four simple questions that your lender must be able to answer correctly.
1. What are mortgage interest rates based upon?
Variable Rate Mortgages fluctuate with the Bank of Canada rate. Any rise or fall in the Bank rate, causes a comparable change in the variable mortgage rate.
Fixed Rate Mortgages are affected by specialized mortgage bonds, mortgage backed securities, or Government of Canada Long Bonds. A professional mortgage specialist will know at least the basics of how rates are determined. Periodically reviewing the above indicators enables a mortgage specialist to suggest sound mortgage strategies up front to manage your mortgage for the long term.
2. What is happening in the market today, and what do you see in the near future and why?
If a lender cannot explain how Mortgage Bonds and interest rates interact and where they are headed, why would you trust their advice for your costliest investment? By working with an experienced, professional, mortgage specialist, and a long term approach, you can significantly reduce your total cost of home ownership.
To verify information and help create innovative solutions to today’s housing challenges, anyone can contact an independent agency such as the Canada Mortgage and Housing Corporation, www.cmhc-schl.gc.ca or speak with a qualified financial planner.
3. What strategy are you recommending and why?
The key word here is “strategy”. If a lender cannot clearly articulate the strategy behind their recommendations to you then they are simply quoting a rate, and quite frankly anyone can do that. On such a large investment make sure that you are dealing with someone who can work with you to customize a mortgage which best suits your needs.
4. What commitment are you giving me to personally manage my mortgage over the long term?
This is the most critical question of all. Many lenders, especially bank personnel, have no desire or ability to proactively manage your mortgage over the long haul. How can you take advantage of changing markets if no one is watching them for you? What if the long term rate drops significantly in a few years? A variable rate mortgage must be monitored to ensure that you don’t miss an opportunity to renegotiate, or lock it in at the best rate. A truly committed mortgage professional will manage your mortgage over the long term, significantly reducing the cost of home ownership. And isn’t that the point?
It is with great satisfaction that I bring my newsletter to you. If you have any pertinent topics for discussion, or have a topic for future publication, please let me know by sending an email to [email protected] or call me at 905-824-4595.
HOW TO BUY A HOUSE vol.1