This may be your first time to enter the housing market, and you’re ready to take on your first mortgage. It could even be that you are already making mortgage payments, but want a better rate. Or, your mortgage may be up for renewal. No matter your situation, this checklist should help in your search for the Best Mortgage Rate.
First Step: Prep Work
You’ll need your current mortgage documents. It’s not unusual to find these stuck away in the bottom drawer of a filing cabinet or underneath a pile of discount flyers for pizza. You may have included them with other papers marked ‘important.’
Become reacquainted with the terms spelled out in your contract. You’ll need to know who the current lender is, the interest rate on loan, the type of mortgage, the penalty for breaking the existing agreement, and when you can refinance. The details of this information will help you determine your options.
If this is your first time to buy a home, get well acquainted with your budget so that you can figure out the amount you can afford to borrow. Make sure you don’t over-extend yourself by taking on more than you can handle. Develop a clear understanding of the overall costs of owning a home.
Second Step: Shop Around
Speak with your current mortgage holder to get the rate currently being charged to new customers. If you can prove that you have a good track record of timely payments and have been loyal to your lender, you will be in a position to ask for a reward in the form of that same introductory rate offered to new borrowers.
Contact the lender’s customer service department and give them a head’s up to the fact that you are shopping around for a better rate. Chances are, they will offer a brand new blended rate that combines a new mortgage product with your existing one that lowers your overall rate. Of course, this all depends on the terms of the original contract.
Third Step: Get Help From A Professional
Truthfully, not many people understand the ins and outs of different mortgage options along with their pros and cons. Do you want a fixed rate, or should it be variable? How about monthly or bi-weekly payments? Questions like this are seemingly endless, especially for the novice.
Mortgage brokers are trained to offer personalized advice about products that fit your needs. They can help you figure out if it makes sense to refinance at today’s rates and pay the penalty for breaking your existing agreement, or if you should wait. These professionals can also help you find the best mortgage rate available.
According to the Canadian Association of Accredited Mortgage Professionals, average Canadians renegotiating their mortgage through a broker were able to reduce their interest rates on average 125 points as compared to 114 among others who went directly through their credit union or bank.
Fourth Step: Lock in Low Rate
If you still have doubts about switching lenders, it will do no harm to get pre-approved by a new lender. That will lock in the new rate. With many worried about an increase in mortgage rates, now is the time to take advantage of the low rates available now. Typically, pre-approvals rates are locked in for as much as 120 days at no charge.
It even gives you more time to find your dream home if you haven’t already. A locked-in rate means there is no need to rush to find a new home because of fear about rising rates.
Fifth Step: Don’t Forget Your Renewal Date
The ideal time to start searching for a new, better mortgage rate is 120 days before your current contract comes up for renewal. Forgetting about the renewal date and giving yourself just a few days in which to compare the market and shop for a new deal, the pressure may force you to give up and, out of convenience, stay with your current mortgage holder.